The Banker’s panel of judges celebrates the best banks in 147 different countries based on their performances over the past year.

Afghanistan

Standard Chartered Bank Afghanistan

Afghanistan presents a unique set of challenges to Standard Chartered, which draws on its international expertise to deliver services and solutions to this war-torn country.

The emphasis of the bank has been to support the reconstruction and development in Afghanistan by providing the donor community, diplomatic missions and the government of Afghanistan with the banking services they need.

Security issues and political turmoil have been a feature of the market in Afghanistan and Standard Chartered Bank Afghanistan has now set up its Business Continuity Plan so that its customer service can continue even if there is a disruptive incident. In the midst of such a challenging environment, the bank has done well to achieve growth in its figures for Tier 1 capital, assets and net profits, even though the numbers are small when compared to the performance of banks in other more stable markets around the world.

 

In 2010 the bank’s Tier 1 capital increased by 13.97% to $13.3m, from $11.67m in 2009, while its assets increased 8.46% to $219m from $202m in the same period. And Standard Chartered Bank Afghanistan’s net profits increased by 1.36% to $5.2m in 2010 from $5.12m in 2009.

Know-Your-Customer and Anti-Money Laundering procedures continue to be of the utmost concern for the bank because of the rampant opium trade in Afghanistan. This is just one of the challenges of working in the country, which has other difficulties such as the threat of terror, crime, weak governance and a weak judiciary and legislature.

The bank has been working toward improving the way it works in Afghanistan, and one of its initiatives has been to partner with the country’s regulator and set up the Afghanistan Institute of Banking and Finance. The two are aiming to strengthen the private sector banking regulatory framework and establish high standards of governance and service delivery.

Albania

Banka Kombetare Tregtare

Albania, Seyhan Pencabligil

A winner for the second year in a row, Turkish-owned Banka Kombetare Tregtare (BKT) has maintained its impressive course through the downturn that occurred in Albania in 2009. As economic growth recovered, BKT doubled its return on equity to 25% in 2010. And asset quality has also improved dramatically, with non-performing loans falling from 8% at the end of 2010 to 6% by June 2011, compared with an average of 15% in the Albanian banking system as a whole.

“The main challenge for us has been to maintain profitability and growth in an increasingly difficult environment, where crisis management has become [part of the] daily routine. In Albania, [where] one-third of the population works in Greece and Italy and in whose banking system these countries have a considerable weight, it is imperative that we have abundant liquidity for any eventuality, which makes profitability all the more difficult,” says Seyhan Pencabligil, chief executive of BKT.

BKT’s stability has made it the bank of choice for important official lending initiatives, for instance as the sole winner of a tender to work with Albania’s Ministry of Finance in developing the local mortgage market, and a Ministry of Agriculture programme to support agribusiness. BKT’s small business banking franchise also won backing from the European Fund for South-east Europe. In addition, the bank has become the first in Albania to offer instalment repayments on its credit cards, and utility bill payments through the internet.

“We have grown organically for more than a decade, at an annualised rate of 27%. In the next year or two, we may consider some merger and acquisition activity to consolidate our position in the region,” says Mr Pencabligil.

Andorra

MoraBanc

MoraBanc scores better than average among its Andorran banking sector peers in most key ratios. Return on equity is 18.8%, cost to income is 35.5% and non-performing loans are 1.48%. The bank achieved a healthy capital ratio of 29.3% and maintained its Moody’s rating.

During the past year one of the main challenges for MoraBanc has been to continue to strengthen its solvency and liquidity positions in an uncertain environment. “This entity’s solvency and its conservative and careful management of the balance sheet have been the key factors for continuing to generate significant profits,” said Gilles Serra, recently appointed CEO of MoraBanc.

The bank has made major investments in technology with the implementation of a Murex platform. This will improve risk management and trading and help the bank to offer customers tailor-made products in accordance with the customer’s risk profile.

An asset and liability programme has also been undertaken and international expansion continues, with upgraded operations in Zurich and Miami.

Next year, the bank will celebrate its 60th anniversary and a monetary agreement with the EU and double taxation treaties will come into force. “These will provide us with new opportunities in terms of markets, financial activities, diversification and international development,” says Mr Serra.

The bank is very committed to its small and medium-sized enterprise (SME) customers and has geared its services towards their special needs in terms of tax advice and credits. The result is that the segment has grown by 17.6% in the three years since the creation of its dedicated SME service.

Angola

Banco Millennium Angola

José Reino da Costa, BMA’s chief executive

José Reino da Costa, BMA’s chief executive

Angola has one of the world’s fastest expanding economies, thanks to its production of 2 million barrels of oil a day. But despite this growth, its economy remains unsophisticated and undiversified.

Banks are key to aiding the development of the non-oil sector. Banco Millennium Angola (BMA), controlled by Portugal’s Millennium BCP, has been at the forefront of attempts to achieve this. In particular, it has focused on getting more of the country’s population, particularly those outside the capital Luanda, into the banking system.

It has opened several branches in 2011 and expects to have 63 in total by the end of it, having started the year with 39. It has also launched several financial products, including ones targeting university students, women and small businesses. And it recently became the first bank in the country to open branches on Saturdays.

BMA has managed its quick growth — net profits rose 63% to $33m in 2010 — carefully. Its cost-to-income ratio fell from 72% in 2008 to 53% in 2010, while its non-performing loans ratio stood at just 1.9% at the end of 2010.

“For 2012 we will target the microfinance segment, launching a specific loan to support small entrepreneurs,” says José Reino da Costa, BMA’s chief executive. He adds that the bank will introduce mobile phone banking soon.

Antigua and Barbuda

Scotiabank Antigua

Marlon Rawlins, country manager, Scotiabank Antigua

Marlon Rawlins, country manager, Scotiabank Antigua

Antigua and Barbuda’s tourism-based economy has been badly hit by significantly lower numbers of visitors over the past few years. Despite this difficult environment, Scotiabank Antigua closed 2010 with growing net profits, after a decline in 2009.

While many businesses struggled during the economic downturn, Scotiabank reiterated its commitment to its retail and corporate clients. It launched a campaign to reduce interest rates on retail loans and other retail products and tailored some of its corporate products to the small businesses segment. Advice on how to write a business plan, cash-flow management and a training programme were services included in this initiative.

In order to contain the level of non-performing loans (NPLs), Scotiabank Antigua provided payment alternatives to customers struggling to meet their obligations by allowing payment deferrals or restructuring their debt. This helped the bank keep its NPLs comfortably below 3% of the loan book.

“Like most economies in the world, Antigua was affected by the global economic downturn which negatively affected our major productive sectors: tourism and construction,” says Scotiabank Antigua country manager Marlon Rawlins.

“This resulted in increased delinquency and low demand for loans in the banking sector which impacted our ability to grow. Managing through such difficult times was a challenge. It required twice the effort to achieve the same results and [an] understanding [of] how to deliver greater results with fewer resources.”

Argentina

Santander Rio

Argentine banks enjoyed a record year in 2010, and Santander Rio secured an impressive return on equity of more than 40% and a 36% net profit growth. The bank owns almost 10% of Argentina’s private sector loans market and its private sector deposits markets, the highest share of any bank in the country.

Santander Rio has focused on developing its transaction banking services, which has helped to sustain a high level of current account deposits and, therefore, a substantial low-cost funding source for the bank.

Santander’s mobile banking strategy has also paid off, and a new platform has attracted a significantly higher number of customers and transactions, while the existing internet banking system continued to channel high numbers of transactions.

Commitment to existing small businesses clients was showed by higher loan amount limits, while the bank designed an account for new small and medium-sized enterprise (SME) clients that would be set up easily and quickly but that would still give access to the full product range available. Further, the bank improved its credit scoring system to better analyse small businesses risk and in an effort to support the growth of SMEs during tougher economic times, Santander Rio made available medium-term loans at lower rates for the financing of certain business investments.

Santander Rio has steadily grown over the past few years and it has ambitious plans for the future too. The branch network has increased this year into areas related to agricultural activities and industries that trade with Brazil, and the plan is to continue this expansion over the next two years.

Armenia

HSBC Bank Armenia

As Armenia’s economy recovered in 2010, HSBC harnessed the improved environment particularly well, growing profits by more than 180%. Even with a capital injection of $8m to continue expanding its business while meeting new capital rules in Armenia, the bank generated the country’s highest return on equity, at 22.7%.

“The main challenge was to continue to find new profitable business with an acceptable risk profile against the backdrop of the large number of local banks competing aggressively in our small market, the more stringent regulatory requirements, particularly for capital adequacy and liquidity, and the increasingly uncertain outlook for the global economy,” says Astrid Clifford, chief executive of HSBC Bank Armenia.

The bank’s profits for 2011 are on course to rise a further 60% on the back of declining loan delinquencies that are allowing lower impairment charges, and rapid growth in interest income. The corporate loan portfolio in particular is the fastest growing in Armenia. Helped by a $1m IT upgrade, corporate customers have 24-hour access to funds via the country’s largest ATM network, and 63% of non-cash transactions by the bank’s corporate clients are now conducted online. With China now one of Armenia’s largest trading partners, HSBC also introduced cross-border trade and settlement accounts in renminbi into the country for the first time.

In the coming year, HSBC Armenia is planning to expand its branch network in the country’s capital, Yerevan. Its new products and services are likely to focus on internationally minded retail and commercial customers.

“Opportunities include the Armenian diaspora and increased international trade – both areas where HSBC has a right to win business – as well as the growing demand for insurance products and ongoing pension reform,” says Ms Clifford.

Australia

Westpac

Gail Kelly, CEO, Westpac Banking Corporation

Westpac has performed well over the past year and despite it being a challenging year, the bank has delivered solid growth in earnings.

In 2010 the bank saw an increase on its net profit of 84.2% to A$6.35bn ($6.25bn), compared with A$3.45bn in 2009. For the six months up until the end of March 2011, the strong performance continued with a net profit growth of 37.7% to A$3,961m, compared to the same period a year earlier.

“The past year has been an important one for us, having delivered solid growth in earnings and good progress on our strategic agenda,” says Gail Kelly, CEO of Westpac Banking Corporation.

Ms Kelly points to the major achievements of the bank in recent months: “We have further deepened relationships with our customers right across the Westpac Group, with stronger cross-sell in both wealth and insurance.”

She also notes that the bank has further developed its multi-brand model with the launch of a new brand – the Bank of Melbourne – which is a local bank for the people living in the city.

“And we’ve reached the half-way point in our major technology investment programme delivering benefits for the group and a better experience for customers,” says Ms Kelly.

This year also marked the third anniversary of Westpac’s integration and merger with St George Bank. “It has been very successfully executed, with net growth in customers and delivering synergies well ahead of initial expectations. It has also assisted in making the entire group more customer-centric,” says Ms Kelly.

Azerbaijan

Access Bank

A sharp fall in real estate markets plunged many of Azerbaijan’s banks into loss in 2010 on the back of steep rises in non-performing loans (NPLs). But Access Bank, which specialises in microfinance and the agricultural sector and is run according to best practice laid down by its multilateral owners and experienced managers, strengthened its position.

Profits were up 32%, while NPLs were just 1%. And that is using Access Bank’s own definition, which includes the total value of all loans with any arrears of more than 30 days – a far tougher measure than that used by any other bank in the market.

“By maintaining industry-leading portfolio quality we minimised losses to write-offs, thus generating industry-leading profitability of more than 50% return on average equity in 2010,” says Access Bank chief executive Andrew Pospielovsky.

Many banks stepped back from new lending altogether, giving Access the opportunity to acquire quality clients and increasing its importance in helping to diversify Azerbaijan’s economy beyond the oil and gas sector. But it continues to do so based on the same high standards, with staff remuneration tied to the performance of the loans that they originate. At the same time, the bank’s balance sheet strength and safe-haven status prompted a massive inflow of deposits, which grew more than six-fold between 2008 and May 2011.

“We see opportunity in responsible banking – by striving to ensure that every product we provide to every client is appropriate for and benefits that client, we will build stronger client relations and a superior quality portfolio. Superior portfolio quality means we are not over-indebting our clients and generates superior profitability,” says Mr Pospielovsky.

Bahamas

Bank of the Bahamas

Paul McWeeney, managing director, Bank of the Bahamas

The Bank of the Bahamas has remained in good shape through the current troubled economic climate: its profits increased and so did its return-on-equity ratio.

As with the rest of the Caribbean, the Bahamas’ tourism and construction sectors have been struggling but Bank of the Bahamas continued lending to corporate customers – which in the region are mostly small and medium-sized businesses. Corporate products ranged from acquisition financing to loans financing the construction of new buildings for the expansion of entertainment, restoration and household retail businesses. The bank’s commercial loans portfolio grew by 8.4% from the previous year.

Among the new initiatives to sustain growth, there was a campaign to encourage young people to use banking products and create savings accounts that could be opened with as little as $10 and which pay higher interest rates than traditional accounts.

On the technology front, investments from previous years have paid off and routine data entry processes were successfully automated, keeping costs down. Further, credit-card processing was brought in house with a view to reducing costs and building a system that can offer this service to other institutions – namely to The

Bahamas’s National Insurance Board, the bank’s main shareholder – something that would significantly boost Bank of Bahamas’s future revenues.

Bahrain

Ahli United Bank

Adel El-Labban, group chief executive and managing director, Ahli United Bank

Despite the volatile global economic backdrop, Ahli United Bank (AUB) continued to grow its business on several fronts and produce successful results in 2010. The bank achieved a net profit of $265.5m in 2010, a 32% increase over 2009, as well as growing its assets by 12.2% to $26.46bn and its return on equity from 9.6% to 12%.

Most notably, AUB remained firmly committed to its vision of being a truly regional bank in the Middle East. This was evident through the bank’s highly impressive geographic expansion, which saw it increase its stake in both Commercial Bank of Iraq from 49% to 59%, and in AUB Egypt from 35.3% to 85.1%. It also acquired a 40% stake in Libya’s United Bank of Commerce and Investment with the aim of capturing trade flows between Egypt and Libya.

AUB has a presence in seven countries in the Middle East, as well as in the UK, through which it serves 570,000 clients through its 131-branch network.   

AUB undertook various initiatives during 2010 to diversify and grow its business model. Based on an in-depth Kuwaiti banking market analysis, the bank’s Kuwaiti subsidiary Ahli United Bank Kuwait was fully converted from a conventional to Islamic bank in April 2010.  

On the retail front, following the launch of a savings prize draw scheme, AUB’s deposits grew from $702m in 2009 to $930m in 2010.  

Through its joint venture with the UK-based Legal & General group, AUB launched a range of bancassurance products. The products have now been rolled out in Bahrain and Kuwait.   

“Looking forward, we expect corporate banking to continue growing at a moderate overall pace,” says Adel El-Labban, group chief executive and managing director of Ahli United Bank. “Infrastructure and contra-cyclical sectors are expected to post healthy growth and represent priority targets.”

Bangladesh

Janata Bank

S M Aminur Rahman, CEO and managing director, Janata Bank

Janata Bank defines itself as a bank of the people, and much of its focus over the past year has been consistent with that description.

The bank is 100% government-owned and has recently faced the challenge of retaining customers’ confidence, largely due to the marketing efforts of the private banks in Bangladesh.

Janata Bank’s key activities in the last year include funding rural infrastructure, increasing financing in the agriculture sector, partnering with non-governmental organisations, working with solar power generation, and financing bio-fertiliser and bio-gas projects. The bank has also opened more branches in rural areas, and has worked on projects that aim to alleviate poverty.

“As a market leader we have introduced the poorest section of people to banking services,” says S M Aminur Rahman, CEO and managing director of Janata Bank.

He adds that one of the major achievements over the past year for the bank was to maintain the upward trend of the bank’s business indicators – such as profitability – even in a difficult environment that is impacted by the ongoing global financial turmoil. The difficulties in such times include keeping non-performing loan (NPL) ratios to an internationally accepted level, says Mr Rahman. Janata Bank’s NPLs have reduced from 8.7% in 2009 to 5.3% in 2010.

Aside from profitability, the bank also emphasises the importance of social and corporate responsibility, and cites the examples of its work in the disaster-prone areas in the south of the country and the hunger-stricken areas in the north.

Barbados

CIBC FirstCaribbean International Bank

Douglas Parkhill, chief executive, CIBC FirstCaribbean International Bank

Douglas Parkhill, chief executive, CIBC FirstCaribbean International Bank

In a difficult economic environment marked by declining profitability in the wider banking market, CIBC FirstCaribbean International Bank managed to close 2010 with a net profit similar to what it achieved in 2009, and with much lower levels of non-performing loans (NPLs).

This was the result of an enterprise-wide strategy that reviewed all NPLs and high-risk loans so that more detailed risk analysis was provided internally, while the bank also committed itself to giving better advice to customers on debt restructuring and additional financial support when needed.

Despite the tough market conditions, CIBC FirstCaribbean continued to invest in innovative products. It launched mobile banking services, a new debit card and improved its internet banking offering, which included a facility to write electronic cheques for corporate clients. Such investments are already reaping rewards with the bank recording a reduction in cheque cashing activity and related operational costs, as well as an increase in sales activity thanks to its new and improved channels.

“Despite continuing difficulties in the world economy, which has in turn affected our region, CIBC FirstCaribbean has been able to maintain a strong core business,” says chief executive Douglas Parkhill. “We have been engaging in prudent risk management, not only to protect ourselves, but also to assist our clients in managing their exposure. We believe that when the good times return our clients will remember who worked alongside them to ride out the storm.”

Belarus

Priorbank

Sergey Kostyuchenko, chief executive, Priorbank

Sergey Kostyuchenko, chief executive, Priorbank

The past year has been a deeply troubled one for the Belarus economy, with a balance-of-payments crisis that resulted in two maxi-devaluations in May and October 2011 that wiped almost two-thirds off the official value of the Belarus ruble in total, and pushed inflation to more than 90%. At the same time, a budget crisis cast doubt on the financial position of the country’s largest banks, most of which are state-owned and have lent heavily to the government and state-owned industries.

By contrast, Raiffeisen Bank International’s Belarus subsidiary Priorbank has so far weathered the storm, recording a profit of E47m in the first half of 2011. This was partly thanks to a strategic currency hedge position, but a non-performing loan ratio of just 2.4% as of mid-2011 also indicates the bank’s very conservative risk management. Public confidence in its strength and stability allowed Priorbank’s share of the deposit market to rise from 6.3% to 7.1% in 2010.

“Priorbank was better prepared for this situation than the other Belarusian banks, and this is a result of the years of work to create a reliable, dynamic and financially sustainable financial institution. The centralised customer-oriented system of management allows Priorbank to resist the negative factors of the economy of the country and provide all necessary financial support to its customers,” says chief executive Sergey Kostyuchenko.

The bank’s priority now is to minimise the impact of the economic crisis, with a particular focus on large privately owned and multinational companies operating in Belarus. Mr Kostyuchenko says there is some restructuring work to do, in particular converting foreign currency loans to the private sector into Belarus rubles. In view of the difficult environment for lending, the bank is also aiming to develop non-credit products such as cash-management, factoring, corporate bond trading and investment banking.

Belgium

BNP Paribas Fortis

Max Jadot, CEO and chairman, BNP Paribas Fortis’s executive board

Max Jadot, CEO and chairman, BNP Paribas Fortis’s executive board

Following its takeover by BNP Paribas in 2009, Belgium’s BNP Paribas Fortis has come back with a vengeance. The integration went ahead in 2010, and the bank used it as an opportunity to roll out new products and services for its customers. It delivered a consolidated profit before discontinued operations of E1.18bn, while its cost-to-income ratio was 76.7% and its non-performing loan ratio was 2.51%.

In the product sphere, BNP Paribas Fortis became the first large bank in Belgium to launch mobile banking, a move designed to keep pace with customers who want the freedom to do banking anywhere at anytime. There was a rebranding of more than 1000 branches in Belgium and the widespread conversion to open architecture to enhance the customer experience.

On the business side, there was the integration of the European network of business centres within BNP Paribas, and the rollout of its Corporate & Transaction Banking Europe (CTBE) in Brussels as a hub for the entire group.

On the wealth management side, 36 new centres opened in Belgium and new and improved websites were launched for retail banking, private banking and corporate and public banking clients. Internationally, the bank opened ‘Belgian desks’ in China, India, Hong Kong and the US.

“The operational numbers in terms of intake of deposits and providing loans increased, giving BNP Paribas Fortis further possibility to support the [Belgian] economy in a difficult environment. A client satisfaction survey showed continued progress. Our liquidity and solvency ratios remain above the requested levels,” says Max Jadot, CEO and chairman of BNP Paribas Fortis’s executive board.

Belize

Scotiabank (Belize)

With flat economic growth in 2010 and limited expectations for 2011, things have not been easy in Belize. On top of the international effects of the financial crisis and subsequent economic troubles in the US and Europe, additional issues afflicted the country.

Earlier this year, Belize’s government put a temporary halt to offshore oil exploration concessions, following environmentalists’ concerns after the BP oil spills in the Gulf of Mexico, a move which substantially reduced the country’s immediate economic prospects.

Operating in such a low-growth environment is not easy for any type of business, and Scotiabank (Belize) is well aware of this. “Our main challenge over the past year was addressing a higher-than-normal delinquency portfolio and an increase in the number and balances of non-performing loans,” says Patrick Andrews, vice-president and managing director at Scotiabank (Belize). “Remaining profitable in a competitive and challenging local environment… required prudent expense management and control as well as the optimising interest revenue opportunities.”

Scotiabank’s non-performing loans did rise from 3.79% in 2009 to 5.6% in 2010, but despite the many challenges the bank had to face, it managed to close the financial year with similar level of net profits as the previous year and provided investors with a healthy return-on-equity ratio of 19%. There was a focus on improving operational efficiency and a number of processing activities were moved to a centralised regional hub. Investments in technology improved the speed and reliability of systems and allowed the introduction of telephone and mobile phone banking.

Benin

Bank of Africa

Cheikh Tidiane Ndiaye, managing director, Bank of Africa

Cheikh Tidiane Ndiaye, managing director, Bank of Africa

Bank of Africa Benin has faced tough conditions since the onset of economic slowdown in 2010, which saw the country’s annual growth fall to 2.1%, low by the standards of sub-Saharan Africa.

Despite this, the lender – the biggest commercial bank in Benin and the only company from the country to be listed on the BVRM, the regional stock exchange – has managed itself well. In 2010, its assets declined by almost 1% to CFA Fr487bn ($990m). But its net profits of CFA Fr6.6bn – almost the same as the year before – amounted to a return on equity of 14%. Its Tier 1 capital, moreover, was raised significantly by 27% to reach CFA Fr37bn, leaving it with a much stronger capital buffer.

Bank of Africa’s non-performing loans in Benin are a problem, amounting to just over 10% of its portfolio at the end of last year. But it has kept expenses under control and had a cost-to-income ratio of just 45% in 2010.

Bank of Africa has focused heavily on raising deposits in the past year. It has managed to increase its market share of them to about 30%, more than any other bank in Benin.

With regards to assets, the lender has been trying to bank more small and medium-sized enterprises (SMEs) in the country. Among its most important moves, it recently formed partnerships with several development agencies in the country that guarantee lending by SMEs, including GARI Fund, a regional organisation, and Germany’s GIZ.

The bank’s managing director, Cheikh Tidiane Ndiaye, says he is optimistic about an economic recovery next year. He adds that Bank of Africa will continue to target Benin’s agricultural sector and also develop its mobile banking service. “We shall keep our focus on the retail market,” he says. “We shall retain our leadership position in all performance criteria.”

Bermuda

HSBC Bermuda

Philip Butterfield, CEO, HSBC Bermuda

Philip Butterfield, CEO, HSBC Bermuda

Closing the 2010 financial year with improved levels of profits and growing return on equity, HSBC Bermuda has been active in a challenging local market. The bank was instrumental in bringing a government bond to the market, it helped to structure Bermuda’s first public-private partnership project to build a new hospital, and has helped to export the country’s know-how in captive insurance to other jurisdictions.

Further, the bank expanded its captive insurance portfolio, created a new team to advise clients on various wealth management products, and gave access to a larger number of clients to its sophisticated online investment system, previously available to a selected few.

But success in a large offshore financial jurisdiction cannot only be measured by a bank’s services to the investment community. HSBC knows this and has teamed up with a local business association, the Bermuda Small Business Development Corporation, to promote these companies, which represent the large majority of the local economy.

The bank maintained a strong balance sheet, focused on high-quality, liquid investments, low-risk mortgages and a diversified loan portfolio to try to contain its growing number of non-performing loans. Its efforts were rewarded by Standard & Poor’s AA- rating, confirmed from a previous evaluation, and an improved outlook, which went from ‘negative’ to ‘stable’.

Bolivia

Banco Nacional de Bolivia

Pablo Bedoya Saenz, chief executive, Banco Nacional  de Bolivia

Pablo Bedoya Saenz, chief executive, Banco Nacional de Bolivia

The past year has been tough for all Bolivian banks but Banco Nacional de Bolivia (BNB) managed to contain declining profits and pushed non-performing loans down to 1.89%, compared to 2.9% the previous year. The bank grew its loan portfolio and used a financing line from a development agency, the Belgian Investment Company for Developing Country, to develop its small and medium-sized enterprise (SME) business division, launched a few years earlier.

The bank’s ‘Youth Banking’ product has proved successful too, and supplied BNB with new customers and new accounts.“Banca Joven [Youth Banking] has had, and is still enjoying, unparalleled success in Bolivia,” says chief executive Pablo Bedoya Saenz. “The aim behind BNB Youth Banking is to introduce the younger segments of the population to banking [products], and at the same time capture a whole new client base for the future. Up to now, tens of thousands of new accounts have been opened by youngsters.”

Talking of the future, Mr Bedoya Saenz says: “In 2012 and the near future, BNB will face some of the most pressing issues currently challenging the national and international banking industry, namely: to improve banking security, develop better business intelligence tools, expand the insurance banking business and generate a better working environment for its [staff]. The best business opportunities in the near future will be those linked to innovation in payment services, the expansion of the banking services to a wider segment of the population and to expanding business with SMEs.”

Bosnia-Herzegovina

Intesa Sanpaolo Banka

Almir Krkalic, chief executive, Intesa Sanpaolo Banka

Almir Krkalic, chief executive, Intesa Sanpaolo Banka

Economic conditions in Bosnia-Herzegovina remain tough, but Intesa Sanpaolo Banka managed to add 74% to its net profits in 2010, partly thanks to sharply improved cost control. In the same period, the bank’s cost-to-income ratio fell 5.5 percentage points, helped by a major internal reorganisation and upgraded electronic banking infrastructure.

“Internal reorganisation of a complete division was a challenge at a time when employees are quite reluctant to accept any changes. Precise measurements and controls of customer satisfaction and the introduction of new e-learning tools for the education of our employees helps to continuously improve awareness of the importance of customer satisfaction,” says Almir Krkalic, Intesa Sanpaolo Banka’s chief executive.

The bank has also retained a better-quality loan portfolio than competitors, even with the introduction of business account overdrafts for small and medium-sized enterprises  (SMEs) and a 20% expansion in its SME loan book in 2010, which accelerated to 22% in the first five months of 2011.

“The main successes in the past year pertained to balancing and optimising credit and liquidity risks, as well as the systematic selection of the sectors of the economy bearing the lowest risk levels for lending loans but, at the same time, being the drivers of real economic activity,” says Mr Krkalic.

He is confident that the bank will continue to reap the benefits of its adaptability and analytical recognition of which clients and sectors offer the best prospects. Recent targeted successes include acquiring younger customers through products such as group debit cards and student current accounts.

Botswana

Stanbic Bank Botswana

Leina Gabaraane, head, Stanbic Bank Botswana

Leina Gabaraane, head, Stanbic Bank Botswana

Stanbic Bank has spent much of the past year focusing on small and medium-sized enterprises (SMEs). “While it’s a story that’s hardly talked about, the SME sector is very dominant in the economy,” says Leina Gabaraane, head of Stanbic Bank Botswana. “It’s an untapped market. We said we needed to align ourselves with the sector by developing the products and services most amenable to it.”

Botswana is regarded as being one of Africa’s most democratic countries and among its least corrupt. Its economy is also strong. Propelled by the extraction of diamonds, its economy is expected to expand about 5.5% this year in real terms and 7.5% in 2012. But small businesses are seen as vital for further development, given that they employ far more people relative to the mining industry.

Stanbic’s push into the SME market has included the introduction of unsecured lending. This is important, says Mr Gabaraane, given that many such companies are unable to post collateral, which usually prevents them from obtaining credit.

Stanbic’s SME loan book is expected to expand by about 40% to 50% this year. This has helped the lender, the country’s fourth largest by assets and profits, boost its market share. It aims to continue this in 2012. “We want to be the second or third largest bank in the country in the next two years,” says Mr Gabaraane.
Stanbic has also been at the forefront of developing Botswana’s private banking industry. It has done this by targeting the directors and management of the companies which are its corporate banking clients. This strategy has seen its average asset book per client climb to between P180,000 ($24,500) and P250,000.

The bank has maintained a leading position in the large-scale corporate market, its traditional strength. It was the lead debt arranger, for example, for the construction of the 600-watt Morupule B power station, which will enable Botswana to become self-sufficient in electricity production.

Brazil

Itaú Unibanco

Itaú Unibanco has a huge credit card operation with about 40 million cards in issue. Before the merger of the two banks, these cards operated on seven different platforms. Now with the integration complete they are all on the same platform and some 15% of costs have been taken out of the operation.

It is these kinds of achievements that make Itaú Unibanco this year’s Brazilian winner. The bank’s return on equity for 2010 was 21.9% with a cost-to-income ratio of 48.8%. With an efficiency drive under way, the cost-to-income ratio is down to 46% this year and the aim is to hit 41% by the end of 2013.

CEO Roberto Setubal says there is a big emphasis on performing tasks “right first time” to cut out cumbersome and expensive manual operations needed to correct errors. From a customer experience point of view, the aim is to make branches more inviting and for them to act as a relationship channel as well as a place to carry out transactions.

Mr Setubal feels that Itaú Unibanco’s strong performance can continue for some time, as the outlook for Brazilian growth remains positive. “We are very positive on Brazil. Macroeconomic conditions are good and the country depends much more on internal demand than external demand, meaning we are more protected from the international crisis. There is a big potential to develop credit here.”

One of the keynote transactions in the past year was the acquisition of 49% of Banco Carrefour, the Brazilian consumer finance operation of French retailer Carrefour, which enabled Itaú Unibanco to offer credit cards to millions of new customers. In the small and medium-sized enterprise area, the loan portfolio increased by 29% in the year to March 31, 2011. The bank’s stellar growth seems unlikely to slow any time soon.

Brunei

Baiduri Bank

Pierre Imhof, chief executive officer at Baiduri Bank

Pierre Imhof, chief executive officer at Baiduri Bank

Last year was challenging for Baiduri Bank, but the bank has proved to be resilient to the various market challenges.

Even though it had higher loan volumes for 2010, intensive competition in the market has meant that there has been intensive competition on loan pricing. Also, the bank had to deal with the challenges after the Monetary Authority of Brunei Darussalam put restrictions on the issuance of credit and debit cards, which impacted the bank’s credit card interest income.

“Following the guidelines of directives imposed by the regulatory authority, which has curtailed consumer spending on credit cards and limited growth in retail lending, banks in Brunei moved aggressively into corporate lending and mortgage loans, resulting in intense competition on pricing,” says Pierre Imhof, chief executive officer at Baiduri Bank.

Mr Imhof adds that the Baiduri Bank Group has three main core business areas: corporate banking, retail banking and consumer financing. “This combination of business lines provides a high level of sustainability, contributing to strong recurring earnings year after year. Through a group approach, we consolidated functions and back-office operations to share resources,” says Mr Imhof.

For the year ahead, the bank has identified opportunities for growth in wealth management and mortgage loans. Mr Imhof says: “We have plans to finance more and more government and oil and gas-related projects.”

Bulgaria

UniCredit Bulbank

Levon Hampartzoumian, chief executive, UniCredit Bulbank

Levon Hampartzoumian, chief executive, UniCredit Bulbank

Falling profits, shrinking portfolios and rising non-performing loans (NPLs) characterised the Bulgarian market in 2010, as the European economic slowdown hit home.

But UniCredit Bulbank has continued to progress, even if new opportunities are scarce. In particular, an improved online platform has helped drive a 65% increase in the number of customers using internet banking.

“UniCredit Bulbank’s strategy had two main objectives. On the one hand: to remain responsive and responsible to our customers, providing excellent service and quick answers to their needs. On the other hand, to perform better than the market,” says chief executive Levon Hampartzoumian.

In a sign of its market-leading sophistication, in January 2011 Bulbank became the first lender in Bulgaria to receive approval to use the sophisticated internal rating approach to measure its assets under Basel II regulations. The bank has maintained a leadership position across all segments, including retail, corporate and investment banking. Bulbank participated in three major project finance deals, all of which had backing from the European Bank for Reconstruction and Development.

“There are a lot of opportunities in Bulgaria in terms of development – in the area of infrastructure and the utilisation of EU funds. Our focus is not to be the biggest bank, but the best in terms of service. Of course, if your service is outstanding, it pays off with more clients and bigger market share. UniCredit Bulbank is well-equipped and positioned to support the country’s business in the path out of the crisis,” says Mr Hampartzoumian.

In particular, the bank increased its retail and small business lending portfolio by 6.1% in 2010, while establishing a stabilisation programme for small businesses that needed to renegotiate their loans.

The provision of extra working capital by the bank that has a 17% market share should be a major contributor to Bulgaria’s economic recovery.

Burkina Faso

Ecobank Burkina Faso

Ecobank has benefited from Burkina Faso’s economic stability of the past few years. Largely shielded from the problems afflicting other parts of the world, the country’s real gross domestic product rose 5.7% last year and is forecast to expand 6.5% in 2011. Inflation, like that in other West African Economic and Monetary Union states, is stable, with Burkina Faso’s currently at about 2.5%.

As such, Ecobank’s net profits in the country were CFA Fr4.6bn ($9.5m) in 2010, 34% higher than in 2009. Its return on equity also rose during the year, from 14% to 19%.

The lender targeted corporate banking opportunities, particular those involving the infrastructure, construction, building materials, manufacturing and tourism sectors.

Ecobank also increased its productivity, with its cost-to-income ratio decreasing from 73% in 2009 to 64% a year later. It did this by improving its technology and reducing turnaround times for loan applications.

Ecobank, already the largest commercial lender in Burkina Faso following a merger in 2009 with BACB, wants to continue growing its assets and deposits in the coming years. Banking more small and medium-sized enterprises as well as the unbanked will be key to its plans, as will developing its offerings for existing customers, not least mobile banking products.

If Burkina Faso’s economic growth is sustained over the next few years, Ecobank is likely to keep on reaping the benefits.

Burundi

Ecobank Burundi

Ecobank entered Burundi in 2008 when it took over liquidated lender Société Burundaise de Banque et de Financement. It has since turned the institution around and made it one of the biggest of the 12 commercial banks in the country. Ecobank now ranks fourth by assets and liabilities, having been in seventh place immediately following its acquisition.

It has taken Ecobank little time to make a success of its Burundian foray. In 2009 it made a loss as it tried to rehabilitate the old lender. But in 2010 it made its first profit, attaining net earnings of $486,000.

This amounted to low return on equity of 5.5%. But that level is only likely to rise the more Ecobank consolidates its position and expands.

Ecobank’s lofty ambitions were made clear by the fact it grew its assets in Burundi by 39% in 2010 to $55m. It is determined to make sure this growth is sustainable, however, and increased its Tier 1 capital even more – by 50% to $8.5m.

The lender’s main focus over the past 18 months has been its competitiveness. Following an extensive market survey in 2010, it reduced many of its fees, notably on letters of credit, guarantees and transfers. This brought in more revenues.

The bank also decided to undercut its competitors when it came to foreign exchange sales, which also boosted its market share.

It recently launched a prominent advertising campaign and will continue with this to build up its deposits and corporate banking business.

Small companies are crucial to Ecobank’s growth in Burundi, as the country has a gross domestic product per person of just $180, making it one of the poorest in the world. So far the bank has made good progress; its SME portfolio expanded 88% between 2009 and 2010.

Cambodia

ANZ Royal Bank

Stephen Higgins, CEO, ANZ Royal Bank in Cambodia

Stephen Higgins, CEO, ANZ Royal Bank in Cambodia

Cambodia’s burgeoning banking market has seen the entrance of a number of competitors, which has made things more difficult for the incumbents. “A fast-growing market is naturally going to be attractive, but with more than 30 commercial banks and a population of just 14 million, the market just isn’t big enough for everyone,” says Stephen Higgins, CEO of ANZ Royal Bank in Cambodia.

This year ANZ Royal Bank was a key player in a number of first-time transactions for the Cambodian market. It was involved in Cambodia’s first ever Khmer Riel-US dollar foreign exchange swap for a local Cambodian business. And in 2011, Cambodia witnessed the first ever interest rate swap for a microfinance institution.

“These two historical milestone transactions marked the first time in Cambodia’s history that Cambodian businesses were able to effectively manage and hedge their interest rate and currency exposures,” says Mr Higgins.

He adds that ANZ Royal is the only bank in Cambodia that has the technical capacity to produce hedging instruments such as interest rate swaps, foreign exchange swaps as well as non-deliverable forwards.

And as for other opportunities in the Cambodian market, Mr Higgins says: “The big opportunities in the coming year will be supporting the agribusiness and manufacturing sectors, where we continue to see a lot of foreign direct investment. While the challenges faced by the global economy will flow through to Cambodia, the outlook for this market is still fairly strong.”

Cameroon

UBA Cameroon

Georges Wega, chief executive, UBA Cameroon

Georges Wega, chief executive, UBA Cameroon

UBA Cameroon, a subsidiary of Nigeria’s United Bank for Africa, has only been operating in Cameroon for four years, but it has made a promising start and has rapidly grown its market share and branch network.

In 2010, its third full year of operations, it made a net profit of CFA Fr1.4bn ($2.8m), compared with a loss in 2008 and a profit of CFA Fr182m in 2009. It managed to be highly profitable last year despite its assets actually declining by 9%.

UBA is still expensive to run. Its cost-to-income ratio was 78% in 2010, but this fell from 97% a year earlier and is likely to drop further this year.

Part of the reason for its ability to increase profits amid falling assets was its ability to help manage sovereign bond issues by Cameroon’s government. UBA also does much work with the state-owned Sonara oil refinery, financing the purchase of its crude and handling between $15m and $30m each month in dollar foreign exchange forwards.

UBA has also improved its technology. It is one of the few banks in Cameroon to have converted all of its cards from magnetic strips to chip and pin.

It wants to grow its balance sheet and profits by at least 30% in 2012, says Georges Wega, chief executive of the bank. He adds that the lender plans to boost its presence in all segments of the banking market. In particular, it will target project financings carried out by the country’s government.

Canada

Royal Bank of Canada

Gord Nixon, chief executive, Royal Bank  of Canada

Gord Nixon, chief executive, Royal Bank of Canada

Continuing to wave the flag for sensible, prudent banking – in typical Canadian style – Royal Bank of Canada (RBC) achieved an impressive growth in profits for 2010, more than 35% higher than in 2009, and a healthy 14.9% return on equity. Assets and Tier 1 capital have expanded by almost 11% and 7%, respectively, while levels of leverage have remained low and liquidity high.

In its home market, RBC has comfortably retained its leadership position. “Canada has continued to be a source of strength and we continue to lead the market place in virtually all areas of financial services in [the country], whether it’s deposit products or lending products or wealth management,” says chief executive Gord Nixon.

RBC’s international activities have also brought good results, in wealth management in particular, where the bank acquired UK-based BlueBay Asset Management, a leading European fixed-income manager. Although not immune from the European sovereign debt crisis, RBC’s capital markets business performed well in relative terms and its international presence is set to stay strong.

Wealth management and capital markets have indeed been the focus of RBC’s strategy in the US, where the bank decided to sell its ailing US retail bank to PNC Financial Services in 2011.

Despite the global impact of the struggling European and the US markets, RBC forecasts a relatively good year ahead for the bank. “From a macroeconomic perspective, it is going to be a challenging environment for the banking industry,” says Mr Nixon. “As a result of that, we’re being diligent in taking our expense growth rate down across our businesses. Our expectation is that we should be getting relatively strong growth, and in Canada we expect to grow at a 25% premium over the industry growth. We have been able to achieve that over the past five to 10 years and we expect to continue to be able to achieve it [in the future].”

Cayman Islands

Scotiabank & Trust (Cayman)

Doug Cochrane, managing director, Scotiabank  & Trust (Cayman)

Doug Cochrane, managing director, Scotiabank & Trust (Cayman)

Trying to increase sales while keeping bad loans down has been a challenging task in the Cayman Islands, where gross domestic product has declined in each of the past three years. Further, immigration issues have added to the country’s headaches and acted as an additional barrier to economic growth.

Scotiabank & Trust (Cayman) sailed through 2010, keeping sales volumes up while minimising loan losses, thanks to early identification and resolution systems. It closed the year with a healthy level of net profits and a low non-performing loans ratio.

“Scotiabank [& Trust (Cayman)] focused on maintaining a high-quality loan portfolio, despite the challenging economic times being faced in [the country],” says managing director Doug Cochrane. “The population attrition on the island was another factor that made growing our business very challenging as well.”

During tough times, it is crucial that internal information systems are effective and efficient. Scotiabank improved its systems to fine-tune the process of offering the right product to the right customer and that, in turn, customers would get timely and detailed information on their accounts. Further investments went into improving online banking and introducing a new mobile banking service.

As for the future, the bank is keen to bring its products to other markets within the Americas. “We will focus on developing offshore business, mainly in the Latin American countries and Canada, given their stable economic position,” says Mr Cochrane.

Central African Republic

Ecobank Centrafrique

Ecobank Centrafrique, like other businesses in Central African Republic, felt the effects of political uncertainty in 2010. This stemmed from the postponement on numerous occasions of presidential and legislative elections, which were eventually held early this year.

The anxiety this created was in large part why Ecobank’s net profits fell in 2010 by 20% to $5.5m. Still, this amounted to a return on equity (ROE) of 27% – ROEs were 45% in 2008 and 35% in 2009.

And despite the fall in profits, Ecobank managed to keep productivity fairly high; its cost-to-income ratio was 57% in 2010. Non-performing loans were also kept under control, making up 6% of the bank’s portfolio at the end of the year.

Moreover, the political volatility did not stop Ecobank launching new products. Among those it introduced were a taxation package on cash dispensing, card management services and overdraft facilities, all of which generated plenty of commission.

Ecobank remained very active in the small and medium-sized enterprise (SME) market. It launched new products for SMEs getting support from international development agencies. It mainly focused on importers, building companies, commodity financing and equipment financing.

Ecobank is Central African Republic’s biggest commercial lender by assets and deposits. Of the 21 branches in the country, 12 are Ecobank’s. But it intends to expand further. Next year it plans to add 10 ATMs to the eight it already has.

Chile

Banco Santander Chile

Claudio Melandri, chief executive, Banco Santander Chile

Claudio Melandri, chief executive, Banco Santander Chile

Chile continues to be considered Latin America’s most stable economy and its banking system one of the region’s healthiest. The country, however, was not immune from the global economic downturn and the spectrum of loan losses and reduction in sales volumes overshadowed the banking system as a whole. And in early 2010, Chile was hit by a devastating earthquake.

“During 2010 we wrapped up a very demanding year,” says chief executive Claudio Melandri. “We had the largest earthquake in Chile’s history in February 2010, so we had to change our plans for at least the first part of the year quite fast. Thanks to a good evaluation of the situation and a well-focused plan, together with an outstanding execution, the bank was able to end the year with a return-on-equity ratio of 27.9%. The cost-to-income ratio reached 35.3%, in line with our goals.”

In such a difficult year, Banco Santander Chile managed to grow its loans and deposits volumes, while improving sales of mutual funds insurance and equity products.

Further, in an effort to push sales but contain losses on loans and reduce risk volatility, the bank invested in new scoring and risk prediction models for consumer lending, residential mortgage lending and small and medium-sized corporate clients.

Additional investment went into a new customer relationship management platform, internet and mobile banking and improved ATM services. Provisions on non-performing loans (NPLs) went from 94% in June 2010 to 112% 12 months later, and the bank closed 2010 with lower NPL levels and higher profits, assets and Tier 1 capital than the previous year.

China

ICBC

Jiang Jianqing, chairman, ICBC

Jiang Jianqing, chairman, ICBC

Reform has been a focus for ICBC as it pursues its ambition of taking centre stage in the international financial community and becoming one of the world’s leading banks.

While banks in many markets around the world have cited the financial crisis as a cause for concern, ICBC sees it as an opportunity, and in the post-financial crisis era it has been actively internationalising and diversifying its operations. The bank has increased its geographical spread and has also been accelerating its innovation in products, technology and sales channels in its bid to become a recognised comprehensive financial services provider.

This has been done through mergers and acquisitions of overseas institutions in both emerging and developed markets, which has laid the foundations for future expansion. Part of the bank’s strategy is focused on the domestic insurance market in China.

Another area of interest has been in China’s capital markets, which have been constantly evolving, and ICBC has developed its intermediary business. In a sign that the nature of the bank’s income is changing, from what has conventionally been based on interest rate spreads, ICBC’s net fee and commissions in 2010 accounted for 19.13% of its total operating income. In addition, investment and trading contributed to more than 20% of the bank’s total operating income.

Another change at the bank, which also reflects the changing nature of the Chinese market, is that the ratio of online banking business to total banking business rose to 59.1%.

ICBC performed well in the past year, with its net profits in 2010 growing 28.3% to Rmb166.03bn ($26.1bn) from Rmb129.4bn in 2009.

Colombia

Banco de Bogota

Alejandro Figueroa, chief executive, Banco de Bogota

Alejandro Figueroa, chief executive, Banco de Bogota

It was a significant year for Banco de Bogota, as the bank has carried out the largest overseas purchase by a Colombian lender, joining the group of ‘multilatinas’, Latin America’s growing businesses expanding outside of their national borders to serve the wider region.

The $1.92bn acquisition of BAC-Credomatic has provided Banco de Bogota with some highly complementary business activities throughout its operations.

BAC-Credomatic is the third largest bank in Central America by assets and a credit card leader in the region, with a presence in nine countries and an established and solid brand in the consumer market. The deal has provided Banco de Bogota’s existing customers with a higher offering of credit and trade products, in both Colombia and Central America.

“Taking advantage of BAC-Credomatic’s experience in debit and credit card system implementation, Banco de Bogota aims to extend its market share in the retail sector and maintain its current and important share in business banking,” says chief executive Alejandro Figueroa. “We took a strategic decision to enter the mortgage market, where the bank has great opportunities for growth, complementing our retail product portfolio. In addition, we will be consolidating our activity in insurance banking, a new business operation, available in all our branches from 2011.”

Banco de Bogota closed 2010 with assets almost one-third higher than the previous year. Tier 1 capital grew by more than 10% and net profits were almost 7% higher than in 2009.

Costa Rica

Banco de Costa Rica

Mario Rivera, chief executive, Banco de Costa Rica

Mario Rivera, chief executive, Banco de Costa Rica

The main challenges of the past year, says Banco de Costa Rica’s chief executive Mario Rivera, were to grow sales and levels of profitability in an adverse international economic environment while keeping bad loans under control. The bank’s prudent management secured a 14.8% increase in net profits while non-performing loans were 2.44% of total loans, a ratio only slightly higher than the previous year.

Because of the difficult economic conditions, Banco de Costa Rica redesigned specific products to better suit clients’ changing needs. These new solutions paid off and in some cases achieved extremely good results. Sales of mortgage products saw a year-on-year rise of 45%, consumer loans grew by 42% and credit cards portfolio rose by 27%.

Looking to the future, Banco de Costa Rica is optimistic, as the telecommunications sector opens up and new providers in this sector, and their services, enter the market. The bank sees potential in the small and medium-sized enterprises (SME) segment too.

Mr Rivera says: “We see opportunity in the telecommunications [sector] opening in Costa Rica. We will keep implementing technology to make financial processes and services more efficient for customers. We see opportunity in the new electronic channels as mobile banking services and social networks. We will aggressively enter into a segment in which we have barely participated: SMEs.”

Croatia

Privredna Banka Zagreb

Bozo Prka, chief executive, Privredna Banka Zagreb

Bozo Prka, chief executive, Privredna Banka Zagreb

High levels of foreign currency debt in the economy mean that Croatia is quite exposed to the eurozone liquidity squeeze, but Privredna Banka Zagreb (PBZ) has still managed to maintain its momentum.

Profits grew 6.5% in 2010, and have accelerated to almost 20% growth in the third quarter of 2011.

“Even though the economic slowdown in Croatia continues to impact all business segments, in  the past year the PBZ Group managed to strengthen its capital position, maintained liquidity, efficiently controlled costs and keep sound asset quality,” says PBZ chief executive Bozo Prka.

Technology uptake is a vital component of the bank’s success, with 200,000 internet banking users, and 80% of all transactions going through the internet, ATMs, mobile phones or electronic funds transfer points-of-sale. The bank was also the first in Croatia to launch an online trading platform for the Croatian stock market, open to both corporate and retail customers.

“PBZ has always been the market leader in the area of electronic distribution channels and card operations, which now includes more than 40 American Express, MasterCard and Visa products with 2 million cards issued. We introduced a brand-new method of payment at points of sale, with the use of two-dimensional bar codes throughout the whole network of the country’s largest supermarket chain,” says Mr Prka.

He believes that membership of the Intesa Sanpaolo group should continue to maintain the bank’s strategic position in Croatia. In addition, multilateral support, including a small business loan programme for E20m from the European Bank for Reconstruction and Development should sustain PBZ’s growth in this segment.

Cyprus

Bank of Cyprus

Andreas Eliades, chief executive, Bank of Cyprus

Andreas Eliades, chief executive, Bank of Cyprus

The Cypriot economy and financial sector are inevitably exposed to the debt crisis in Greece, and the European Banking Authority (EBA) urged Cypriot banks to raise their capital in October 2011, to withstand losses on Greek sovereign debt. Bank of Cyprus was in the best position to respond to these pressures, having increased its Tier 1 capital by 25% over the past year, and issued a contingent convertible bond for E890m in June 2011. In November 2011, the bank offered to exchange up to E600m of this bond into a mandatory convertible, to further shore up its capital.

“Bank of Cyprus is in a very strong position – despite the ongoing crisis in Europe – as a result of its conservative commercial banking model, and its four-pillar strategy of effective risk management and increasing its recurring profitability, capital and liquidity,” says chief executive Andreas Eliades.  

In the first half of 2011, net interest income rose 11% despite the higher borrowing costs for peripheral eurozone banks. Deposits fund 77% of the bank’s lending, while upcoming wholesale maturities total less than E50m for the next two years. In addition, liquid assets are at 28% of the bank’s total portfolio, all of which gives the bank a significant cushion to cope with the volatility in eurozone funding markets.

Even while it navigates the Greek crisis fallout, Bank of Cyprus is still tapping into growth opportunities. The bank signed a deal with China Development Bank in January 2011 to co-finance projects in shipping, renewable energy and infrastructure in Cyprus and elsewhere.

“The continued focus on the four main pillars of our strategy will enhance the group’s ability to benefit from opportunities that will emerge from the economic recovery and thereby establish the group as a powerful regional banking institution in south-eastern Europe,” says Mr Eliades.

Czech Republic

Ceskoslovenska obchodni banka

Pavel Kavanek, chief executive, Ceskoslovenska obchodni banka

Pavel Kavanek, chief executive, Ceskoslovenska obchodni banka

Perhaps the best tribute to Ceskoslovenska obchodni banka (CSOB) comes from its 100% owner, Belgium’s KBC Group. In its original restructuring plan submitted to the European Commission for approval in 2009, KBC intended to sell its operation in the Czech Republic and keep its bank in Poland. By 2010, the parent had reversed this decision, and requested permission from the European Commission to keep CSOB while selling up in Poland.

A 20.6% return on equity and 24.4% growth in underlying profits in 2010 (excluding the one-off sale of its Slovak operations in 2009) make a strong investment case. But so does its market-leading risk management, which kept the cost of risk to a peak of just 83 basis points in the third quarter of 2010. By December 2010, the bank was ready to announce that the crisis was over, and allow borrowers a fresh relaxation of credit processes to stimulate new lending.

“We have been able to grow market positions in several core products, which is not easy for a group of our size. I am also very proud of our risk management – our credit culture compares very well to the market,” says CSOB’s chief executive, Pavel Kavanek.

For 2012, the bank is planning an ambitious self-service portal that will allow clients to log in online and manage their finances through the full range of channels, including call centres, self-service kiosks at a post office, smart phones and interactive televisions. In addition, the platform will facilitate payment systems for partner service providers such as retailers or transport companies.

“Big, obvious opportunities are becoming rare. We will continue to invest in the capabilities of our people and the health of our organisation to identify, develop and deliver value to clients in a more diverse, distributed and meaningful manner,” says Mr Kavanek.

Democratic Republic of Congo

Rawbank

Given its sheer size and poor infrastructure, expanding a branch network in the Democratic Republic of Congo (DRC) has never been easy for banks. But Rawbank has pushed ahead, opening six branches this year, including in the far-flung and sometimes lawless east of the country. “This ongoing branch expansion is always very difficult in the DRC,” says Mazhar Rawji, Rawbank’s chairman. “To open six branches is a very important feat.”

Rawbank, the biggest lender in the country by assets and deposits, plans to open another 10 branches next year to add to its current 24.
The bank has managed to make profits for the past eight years, despite the country’s often-chaotic politics and economic volatility. In 2010, Rawbank made net profits of $5.7m, amounting to a return on equity of 17%. It raised its Tier 1 capital by 60% to $27.5m.

Rawbank has placed plenty of emphasis on small businesses in the past year. It signed multi-million dollar loans with the likes of the International Finance Corporation and the European Investment Bank to support such borrowers. Its exposure to them increased 37% to $121m in the 12 months to the end of June 2011.

Improving its technology has also been a priority for Rawbank. It launched online banking this year, established a data recovery centre in the DRC and installed compliance software called Accuity, which monitors all transactions and sends out a series of alerts based on certain parameters.

The bank has big ambitions for 2012. It wants to set up a private banking business that will be the country’s first to offer Congolese exposure to bonds, equities and commodities abroad. “We have the green light from the central bank to offer international products,” says Mr Rawji.

Rawbank is also close to being mandated by two clients — in the brewery and telecommunications sectors — to arrange dollar bonds, a rarity in the DRC, of $20m to $30m.

Denmark

Nordea Bank

Christian Clausen, CEO, Nordea Bank

Christian Clausen, CEO, Nordea Bank

While several smaller banks in Denmark have entered bankruptcy over the past year on rising non-performing loans and difficult funding conditions, Nordea’s profits in Denmark rebounded 140% in 2010.

The bank’s 11% return on equity in Denmark was the highest among the largest players, while total assets declined only slightly in 2010, despite weak economic conditions and heavy competition, especially in the large corporate sector.

Nordea’s Danish operations benefit from the very strong funding position of the group as a whole. Its larger Scandinavian neighbour Sweden is perceived as a fiscal safe haven, and the bank prefinanced a significant proportion of maturing wholesale obligations before the eurozone debt crisis began to bite. As a result, the bank’s average bond maturity is now 3.7 years, up from 2.1 years in 2008. Following a drive to collect deposits, combined household and corporate deposits were up 15% year on year in the second quarter of 2011.

The group has also engaged in active balance sheet management, bringing down total risk-weighted assets even while total lending is growing, therefore strengthening the overall capital adequacy ratio by reducing risk, rather than cutting customer business.  

On the retail side, Nordea’s strategy is to move customers up the value chain to more premium products. In Denmark, the bank increased the number of premium retail clients in its Gold and Private banking segments by 57,500. The bank has collected significant retail market share from rivals, with its share of household lending up to 20.1% in 2010 from 14% in 2008.

Its corporate banking market share is also expanding in Denmark, from 20.5% in 2009 to 21.6% in 2010, while the bank has attracted 13,500 new small business clients since the end of 2010. A branch network transformation that separates transactions from advisory services has further helped the quality of service delivered to business clients.

Djibouti

International Commercial Bank

Podila Phanindra, head, International Commercial Bank in Djibouti

Podila Phanindra, head, International Commercial Bank in Djibouti

Banking in Djibouti was tough enough before the start of 2011. But since then two new commercial lenders have set up operations, bringing the total number of banks in the country to 11. Given that Djibouti only has a population of 800,000, competition could hardly be more intense.

Despite this, International Commercial Bank (ICB) has managed to keep on growing its profits in the past few years. They rose 240% to DFr47m ($264,000) in 2010, having grown seven-fold in 2009.

Djibouti lacks a treasury or interbank market. As such, lending to retail and corporate customers is just about the only way for banks to deploy funds. ICB has made sure it does use its balance sheet in such a way. Its loan to deposit ratio at the end of 2010 was 51%, substantially above the sector average of just 32%.

This year the bank has focused more on consumer banking. But it has also increased its exposure to small and medium-sized businesses (SMEs). It started off 2011 aggressively, expanding its SME portfolio 20% to DFr540m in the first three months alone.

But it has managed this growth carefully. Its non-performing loans ratio was under 1% at the end of 2010. “The focus was on maintaining a very high quality of assets throughout the year and it was successful,” says Podila Phanindra, head of ICB in Djibouti.

The bank has also improved its technology, including upgrading its Swift operations. This led to faster remittance services, an importance business line for Djibouti’s lenders.

Next year, ICB plans to exploit new foreign investment in the country, particularly in the transport sector, which is vital for Djibouti given its status as a shipping hub.

Dominican Republic

Banco Multiple Leon

Carlos Guillermo León Nouel, president, Banco Multiple Leon

Carlos Guillermo León Nouel, president, Banco Multiple Leon

In a country reliant on exports, five years of declining sales of goods and services to international markets are hard to bear. The Dominican Republic has suffered from poor export volumes since 2007, and the contribution of exports to the country’s gross domestic product has been going down at an average of 200% per year. Further, increases in the prices of gas, food and energy have generated worrying levels of inflation.

Operating in such an environment has been a great challenge, which makes the performance of Banco Multiple Leon all the more commendable, as the lender promptly adapted its processes and products to the changed market and different customers’ needs.

The bank closed 2010 with net profits 88% higher than the previous year, kept on expanding its assets – focusing attention on those that would provide higher performance – increased its Tier 1 capital, and provided investors with a healthy 21% return on equity.

“The continuous improvement of processes is the fundamental pillar that supports the bank’s recent successes,” says Carlos Guillermo León Nouel, president of Banco Multiple Leon. “We were able to reduce the time cycle of commercial loans from six days to two days and home mortgages from 18 days to six days. We also reduced the total time it took to resolve credit card claims to less than two days.”

Improved processes meant that the bank’s cost-to-income ratio continued to decrease and went down to 64.5% in 2010 from 68.1% in 2009, which was already a substantial improvement from the 80% ratio of 2008.

Ecuador

Produbanco

Abelardo Pachano Bertero, vice-president, Produbanco

Abelardo Pachano Bertero, vice-president, Produbanco

In the highly controlled banking market of Ecuador, where market liquidity and banks’ product prices are usually decided by the monetary and banking supervisory authorities, lenders’ ability to manage risk is restricted. On top of this, the significant slowdown of the Ecuadorian economy made it difficult to grow business lines and provide shareholders with a good return.

While caps on interest rates for a number of banking products were lowered last year, Produbanco successfully managed to expand its retail banking and small and medium-sized enterprises businesses, while keeping non-performing loans at very low levels. The bank focused on asset quality, adapted products to customers’ changing needs and decentralised decisions where suitable to provide a timely service and to bring it as close to the clients’ operations as possible.

Investment in technology allowed for the launch of a new mobile banking application and improved, safer online banking services.

Produbanco’s strategy paid off. The bank grew its net profits by 21% last year, after the previous years of declining income, while also expanding assets and strengthening its Tier 1 capital. The return-on-equity ratio also improved and was 14.12% for 2010, up from the 12.52% of the previous year. Its cost-to-income ratio, despite still being high, at 73.67%, has improved from the 2009 figure, while non-performing loans have continued on their downward trajectory, standing at 0.76% at the end of 2010.

Egypt

Commercial International Bank

The revolution that overthrew ex-president Hosni Mubarak’s regime in February sent Egypt’s economy crashing, caused inflation to spike and led official foreign exchange reserves to plummet.

Businesses in the country have been under extreme stress as a result.

Commercial International Bank (CIB), Egypt’s biggest private lender and third largest overall, did more than merely survive, however. Even during the height of the unrest in the few weeks following the start of anti-Mubarak protests on January 25 — when the country’s banks were shut — CIB ensured its customers’ needs were met. Relationship managers were instructed to keep in contact with their clients and CIB’s staff kept on delivering salaries to businesses, with or without security in tow.

And far from halting new business, CIB carried on lending, increasing its assets by 5% in the first quarter. Deposits increased too, by 3%, showing that Egyptians were more than confident in the bank’s strength.

The result is that CIB has increased its market share of loans and deposits in 2011. Remarkably, given what the country has been through, its management thinks it can obtain a return of equity of 20% for 2011, not far below that of 28% in 2010. “The real test of our solidity is whether we can bring back top-line revenues by the end of the year to the same level that they were in 2010,” says Hisham Ezz Al-Arab, managing director and chairman of CIB. “If we can do that, and I think we will, that means the engine is functioning well.”

Mr Al-Arab is optimistic about 2012, despite Egypt’s continued political fragility. “All the political parties, with no exception whatsoever, mean good for the country,” he says. “The army wants to go back to its barracks. All the country needs is a legitimate government in place.”

Estonia

SEB Pank

Riho Unt, chief executive, SEB’s operations  in Estonia

Riho Unt, chief executive, SEB’s operations in Estonia

The past 18 months have brought economic recovery for Estonia after one of the most severe contractions in Europe, and SEB Pank has capitalised on the turnaround. The bank returned to profit in 2010, with return on equity at 10.8% – lower than before the crisis, but still higher than the average in many eurozone countries. The bank also slashed its cost-to-income ratio, from 73% down to 49%.

“In 2010, the main challenge was to detect the moment when the sustainable recovery of business activity started. SEB had used the period of economic downturn for several business model improvements, which allowed us to be in the best shape to meet recovering demand in the business environment,” says Riho Unt, chief executive of SEB’s operations in Estonia.

In a bid to avoid mass redundancies, the bank launched a comprehensive retraining programme in 2010 designed to shift staff focus from products onto customer relationships. The bank also used the stagnation in the real estate market as an opportunity to reorganise its branch network, placing new offices in more convenient locations for clients. The combined effect of these measures has been to make SEB better prepared than competitors for the pick-up in business, with lower staff turnover and training needs today.

“We see many possibilities for extending committed relationships both in retail and business banking arms. Efforts in managing business client relations resulted in the bank increasing business clients by more than 5% in the past year, winning more than 3000 clients from other banks,” says Mr Unt.

He plans to continue upgrading the bank’s internet and mobile banking services, which are already estimated to save the bank the work of about 2500 branch offices each year. One new initiative launched in March 2011 is to offer a mortgage advisory service via Skype.

Ethiopia

Dashen Bank

Lulseged Teferi, head, Dashen Bank

Lulseged Teferi, head, Dashen Bank

Dashen Bank has further consolidated its position this year as the biggest privately owned lender in Ethiopia, a market whose banking system, despite being liberalised in the early 1990s, is still dominated by state-owned institutions.

In October, Dashen announced a record post-tax profit for the 2010/11 fiscal year of 451m birr ($26m), up 39% from 2009/10. Assets rose a hefty 18.5%. But Dashen has maintained a strong capital buffer and has a capital adequacy ratio of 23%. This, along with Dashen’s low loan-to-deposits ratio of 52% and Ethiopia’s rapid real economic expansion of more than 10%, means there is still plenty of scope for growth.

Dashen has also been among Ethiopia’s most innovative banks in recent years. It was the first to bring card payment services to the country and this year it launched mobile banking. Moreover, it has expanded its fee-based income by further developing its international money transfer operations.

The bank is leading efforts among Ethiopia’s private lenders to extend credit to small corporate borrowers. Among its recent moves, it signed an agreement with US and French development agencies to provide loans to small businesses and microfinance institutions.

Next year it plans to introduce ATMs that accept deposits. “We must be the first ones to bring these in,” says Lulseged Teferi, head of Dashen Bank.

It will also build on its network of 64 branches as it seeks to expand banking services in what is a very lowly penetrated market.

Finland

OP-Pohjola Group

Reijo Karhinen, executive chairman, OP-Pohjola

Reijo Karhinen, executive chairman, OP-Pohjola

An effective bancassurance model and improvements to the management of its co-operative group structure helped OP-Pohjola continue its steady progress, with net profits up 24% in 2011. The bank established a central service unit for the co-operative bank members, separate from its central banking functions, designed to improve the group’s responsiveness to fast-changing customer demands. In particular, OP-Pohjola took advantage of lay-offs at Nokia to acquire skilled staff to enhance its mobile and internet banking development.

“Increasing regulatory burden together with challenging market conditions are putting more pressure on banks’ profitability while significant investments in service offering and distribution channels are required to meet changing customer needs. Hence, striking the right balance between growth and efficiency initiatives – in combination with sensible pricing policies – has become increasingly critical to future success,” says OP-Pohjola executive chairman Reijo Karhinen.

Closer integration between banking and insurance arms has brought the proportion of cross-selling to customers to record levels. The bank also established a new subsidiary, Pohjola Health, at the start of 2011 to provide employee wellbeing and benefit services to its corporate clients. OP-Pohjola’s corporate banking has performed particularly well, with its corporate loan book growing 11% in the past two years, compared with a 1% decline in corporate lending for Finland as a whole.

“We have significant potential to further increase the number of joint banking and insurance customers within our existing customer base. Moreover, we believe the operational environment will continue to favour banks with a strong financial position and solid reputation, supporting our ambition to further strengthen our funding structure as well as build on our leading position within the small and medium-sized enterprise segment,” says Mr Karhinen.

France

Confédération Nationale du Crédit Mutuel

Alain Fradin, chief executive, Confédération Nationale du Crédit Mutuel

Alain Fradin, chief executive, Confédération Nationale du Crédit Mutuel

At a time of liquidity squeezing for many eurozone banks, Confédération Nationale du Crédit Mutuel continues to represent a safe haven, with 70% of its clients also among its owners, a non-performing loan ratio of just 3% and a retail customer base that provides most of its funding via deposits.

Chief executive Alain Fradin says that 85% of its net banking income stems from stable activities, which drove a rise in profits of more than 60% in 2010. This is backed up by a strong core Tier 1 capital adequacy ratio of 11.6%, and minimal recourse to dollar wholesale funding, which has now become scarce for European banks.

“Crédit Mutuel stands out as one of the major banks in France and Europe, serving more than 29 million customers. The results so far in 2011 have seen a sustained commercial activity. Dynamism, proximity and quality of the commercial relationship have notably enabled customer acquisitions, the development of the network, a decrease of the cost of risk in the retail and financing bank, as well as the increase in outstanding credit and deposits,” says Mr Fradin.

Crédit Mutuel has a 19.2% market share in loans granted to start-up companies, and approved loans to small businesses rose by 16.3% in 2010. It is also the market leader for providing remote internet security to its online banking customers.

“Our results illustrate and confirm the adequacy of our development model in mobile telephony, e-banking, electronic payments, electronic surveillance and insurance. Crédit Mutuel’s solid fundamentals place it favourably in comparison both to its French and European competitors, and give it means to face the crisis, or even come out strengthened,” says Mr Fradin.

Gambia

Trust Bank

Pa Njie, managing director, Trust Bank

Pa Njie, managing director, Trust Bank

Trust Bank strongly came through Gambia’s 2010 slowdown, caused by a fall in tourism, remittances and exports. Its assets grew 16% to 3.4bn dalasis ($113m) during the year, while its net earnings rose 8% to 70m dalasis. The latter amounted to a return on equity of 24%. This was less than the level of 37% attained in 2008, but an improvement from 2009.

And while Trust Bank’s non-performing loans ratio of 11% at the end of 2010 was high, it fell five percentage points from 16% a year earlier.

The bank went about its expansion in the past year with an aggressive marketing strategy. It also renovated some of its existing branches, built new ones, improved its mobile banking services and installed new ATMs.

In March, Trust Bank became the first lender in Gambia to launch an electronic bill service payment. This allows people — both customers of the bank and non-account holders — to pay utility bills, phone bills and school fees, among others, at its branches. The payments are made and registered immediately. Pa Njie, the bank’s managing director, said at the product’s launch that it would prevent

Gambians having to travel to schools or several different offices to pay their bills, instead enabling them to do that much more quickly and in one go at Trust Bank’s branches.

Also in the past year, Trust Bank upgraded its internet banking service, which now allows customers to make payments online.

“The financial crisis illustrated the need for banks to focus on their essential role in society: to help customers save, invest, spend, borrow and protect their money with trust and confidence,” says Mr Njie.

Georgia

TBC Bank

Vakhtang Butskhrikidze, chief executive, TBC Bank

Vakhtang Butskhrikidze, chief executive, TBC Bank

Competition is intensifying in Georgia as the market recovers and new investors in the banking sector build up their operations. But TBC Bank managed to stay ahead of the pack in terms of return on equity, which reached 14% in 2010 and climbed to 23% in the first quarter of 2011. The bank’s non-performing loan ratio was just over 1%, significantly lower than peers.

“We successfully addressed the challenge of competition, and even increased market share and further improved profitability. In addition, continuing turmoil in global capital markets made it difficult for us to access international funding, but we managed to successfully focus on local funding,” says TBC Bank chief executive Vakhtang Butskhrikidze.

The bank’s cost-to-income ratio is gradually declining, to 51.4% in the first quarter of 2011 from 55.1% in 2010. And TBC has refocused its strategy on a series of segments where it feels it has the best competitive advantage, including medium- and high-income individuals, blue-chip corporates, larger mid-sized companies, and microfinance via its subsidiary Constanta.

TBC implemented a project during 2011 to roll out a multichannel service covering the internet, mobile and ATM terminals, all accessed through a single system. The bank has also launched a back-office project to automate analysis of profitability across all segments and products, starting with the bank cards product in March 2011. The bank’s aim is to reduce transaction costs by 20% over the two-year life of the project.

“We will focus on creating a leaner bank structure, which will concentrate on service and sales efficiency, further enhancing branch productivity and client experience. We will consider transferring transactions and sales to alternative distribution channels as a major tool to achieve efficiency objectives,” says Mr Butskhrikidze.

Germany

Commerzbank

Eric Strutz, chief financial officer, Commerzbank

Eric Strutz, chief financial officer, Commerzbank

Germany’s second largest lender is still some distance from full recovery, but the past year represented a series of crucial steps in ensuring its future. The bank concluded the integration of Dresdner in Germany’s largest ever bank merger in May 2011. And it returned to profit at the end of 2010, a year ahead of the schedule drafted in 2009 in its ‘roadmap 2012’ strategic programme.

“The bank has continuously outperformed its targets: we managed to improve our profitability significantly, we were successful in de-risking and de-leveraging our balance sheet and we improved our capital base,” says chief financial officer Eric Strutz.

“Our business model is bearing fruit, and it is testimony to the successful implementation of the right strategic measures and the extremely hard work of our employees.”

Another vital development was the two-stage capital raising of E11bn, completed in June 2011. This not only recapitalised the bank, but also allowed it to pay down some of the German state participation taken up at the height of the financial crisis – again, ahead of schedule.

“The successful capital measure was a milestone for Commerzbank, it was the largest transaction of this kind ever in Germany, and we managed this highly complex exercise despite a challenging economic environment. Due to its state-of-the-art structure via two interlinked capital markets placements, it provided a maximum of transaction certainty,” says Mr Strutz.

The core bank segments including retail, the mittelstand (mid-sized companies) and its corporates and markets division are all beginning to generate improved revenues, totalling E3bn in the first three quarters of 2011. Commerzbank remains dependent on a resolution of the eurozone sovereign crisis, which tipped the bank back into a net loss in the third quarter of 2011, but Mr Strutz says it will continue to support its German clients and prepare for regulatory changes.

Ghana

Ghana Commercial Bank

Simon Dornoo, managing director, Ghana Commercial Bank

Simon Dornoo, managing director, Ghana Commercial Bank

Ghana Commercial Bank (GCB), the Ghana’s biggest lender by assets, has carried out a remarkable makeover in the past two years. Following a steep rise in non-performing loans to 20% of its portfolio (most of them emanating from the oil and mining services sectors), the bank is on track to reduce them to 6% by the end of the year.

Its success in tackling delinquent assets followed its appointment of a new managing director, Simon Dornoo, in 2010. Under his leadership, the bank made recovering impaired loans a priority. “It worked very well,” says Mr Dornoo. “We have really repositioned the bank. We’ve built a strong capital and liquidity platform that can launch us to the next level.”

But despite having to fix its balance sheet, GCB has remained highly profitable. It made net profits of 55m cedis ($34m) in 2010, up from 18m cedis in 2009. This amounted to a return on equity of 23%, a level which most lenders in the West can only dream of in the current economic climate.

This year looks better still. Net income for the first nine months rose 7% to 38m cedis.

GCB’s aims in 2012 include growing its consumer banking arm, which has traditionally been neglected at the expense of corporate banking. It also wants to build its transaction banking operations to increase fee-based revenues, which are becoming increasingly important as competition forces down net interest margins in the country.

GCB’s turnaround has left it well positioned to take advantage of Ghana’s high economic growth. Mr Dornoo says this and its branch network — the biggest in the country — should mean it is able fully to exploit the high demand for credit among Ghana’s rising middle class.

Greece

Alpha Bank

Sovereign restructuring will continue to pose heavy strains on all Greek banks, but Alpha Bank stood out among the country’s top tier as the only one that remained in profit in the first half of 2011, despite taking a 21% haircut on its Greek sovereign exposure. Pre-provision income was stable year on year at E560m, while staff costs declined 3.3%.

The bank’s general expenses continued to decline, in line with its platform redesign and procurement optimisation initiatives, mainly in its Greek operations. Net interest income, the main contributor of pre-provision income, was positively affected by the continued progress in repricing the bank’s asset side, as well as from the improvement in its deposit pricing.

In a further vital development, Alpha signed a merger agreement with one of its peers, Eurobank EFG, in August 2011, which will create the country’s largest bank in all segments, and the largest network of branches. This should have the critical mass to weather the storm, whatever additional capital demands may fall on Greek banks.

Provided the merger clears the final approvals, the new bank will be among the top 25 largest eurozone banking groups with pro forma total assets of E146bn, and the bank’s executives believe it will have the appropriate critical mass to establish it as a reference stock in the capital markets. It will be well placed not only to withstand the current economic turbulence but also to create new opportunities and play a wider role in the south-east European region.

While the combined bank will need to take extra provisions in the face of a potential 50% write-down on Greek sovereign debt, it will benefit from Alpha’s existing deleveraging strategy. Over the 18 months prior to June 2011, the bank’s assets shrank by E6.2bn to E63.4bn, with E1.7bn of securities sold, and an extra E532m of provisions laid down in the first half of 2011.

Guatemala

Banco Industrial

Diego Pulido, chief executive, Banco Industrial

Diego Pulido, chief executive, Banco Industrial

Despite the deteriorating economic conditions, Banco Industrial retained its lead in Guatemala’s loans and deposits markets and improved its support to corporate clients trading and expanding abroad. Its non-performing loans (NPLs) ratio was also the lowest among the top lenders in the country.

“Despite the low demand for loans, we were able to maintain and increase our profitability ratios by focusing on cost-reduction initiatives, attracting new clients, targeting retail segments and cross-selling our products with other subsidiaries of our group,” says Banco Industrial chief executive Diego Pulido.

“Due to the global crisis, we estimated a deterioration in our loan portfolio, [but] our rigorous and conservative credit policies allowed us to maintain sound levels in our loan portfolio, maintaining very low levels of NPLs to total loans and high levels of coverage ratios.”

During such difficult times it is essential for banks to ensure that they are strongly capitalised, and while making sure that investors’ returns remained high, Banco Industrial also successfully increased its Tier 1 capital by more than 7%. Mr Pulido says: “Another important challenge was the decision to strengthen our capitalisation ratios [due to] any uncertainty resulting from the global crisis. In 2010, even though we are the largest bank in Guatemala, our capital ratios levels reached 14.8%.”

As for the future, Banco Industrial will seek opportunities in El Salvador, where it began operations in 2011; in Honduras, through Banco del Pais, which is 90% owned by the bank; and in the microfinance segment across all of Banco Industrial’s markets.

Guinea

International Commercial Bank

Ananta Padmanabhan, head, International Commercial Bank

Ananta Padmanabhan, head, International Commercial Bank

Guinea’s banks have suffered a torrid time in the past three years. A military coup in the Francophone west African country in late 2008 put their operations under plenty of stress.

International Commercial Bank (ICB) has made the most of the trying conditions. Having made a net loss of GFr540m ($77,000) in 2009, the bank returned to profit in 2010, earning GFr1.05bn. It also cut its non-performing loans ratio from 12.5% to 1%, chiefly by writing off assets against which provisions of 100% had been made, so as to make its balance sheet more transparent.

It managed to maintain a strong liquidity buffer, however, and had a capital adequacy ratio of 42% at the end of 2010. This was thanks in part to a focus on deposits, which rose 37%.

And despite Guinea’s political problems, ICB has not stopped seeking new customers. As such, its loan portfolio grew 17% in 2010.

This year, its initiatives include opening some branches on Saturdays and providing ‘cash pick-ups’ for customers wanting to deposit their daily cash collections but which struggled to visit a branch themselves.

The head of ICB, Ananta Padmanabhan, is optimistic about the country’s situation, following the installation of a civilian government in January. But he cautions that the economy is still fragile. “Changes are positive,” he says. “[But] new measures to stabilise the economy will take some time to be effective.”

Mr Padmanabhan adds that ICB will expend much of its efforts next year on small businesses and the agricultural sector. “We are gearing up ourselves to explore these opportunities,” he says.

Guinea-Bissau

Ecobank Guinea-Bissau

Ecobank Guinea-Bissau returned to profitability in 2010 when it made net earnings of CFA Fr129m ($266,000), following a loss of CFA Fr1.3bn a year earlier. This was with a low return on equity of 2% and amounted to a cost-to-income ratio of 97%.

Yet the performance of Ecobank, which has only been in Guinea-Bissau for four years, is impressive given the country’s economic weakness and political instability. The west African country has a history of military coups, is one of the world’s poorest nations (gross national income per person is only $510), relies heavily on foreign aid and has no natural resources of note (cashew nut production is the economy’s mainstay).

But despite the difficulties of operating in Guinea-Bissau, Ecobank is ambitious. Currently the second biggest commercial lender in the country by assets (it had CFA Fr34bn at the end of 2010), it wants to be the largest and has launched an aggressive marketing campaign to ensure this happens.

Ecobank is focusing on opportunities to fund infrastructure projects, particularly transport and telecommunications networks. It is also trying to win business from companies in the food and construction sectors.

Retail banking is important, too. Ecobank only has four branches in Guinea-Bissau, but plans to launch several internet and mobile banking products to enable its 13,000 account holders to access banking services more easily.

Ecobank Guinea-Bissau’s Tier 1 capital was increased by 36% to CFA Fr6.8bn in 2010. This left it with a high capital adequacy ratio and plenty of firepower to fund its expansion.

Guyana

Scotiabank

Amanda St Aubyn, country manager, Scotiabank

Amanda St Aubyn, country manager, Scotiabank

Often, the best time to innovate a business is during challenging times, and Scotiabank was the first to introduce mobile banking in Guyana in the summer of last year. Since then, the bank has seen a 10% monthly usage increase. A contact centre was also introduced to support mobile and online banking customers, as well as new online products. Investments were also made in improving online functionality.

Online support was extended to the smaller businesses segment, along with a new set of products and services specifically designed for these customers. These range from term loans to credit line and overdraft protection to a special online package for small enterprises that includes online tools to help writing a business case and to manage cash flows. Fee collection processes were automated and anti-money laundering compliance systems were improved. The bank’s net profits continued to rise and both assets and Tier 1 capital expanded.

Country manager Amanda St Aubyn says: “The main successes [of last year] were the introduction of a new deposit suite of products more suited to customers’ needs; [and] improved fee automation; improved alternative channel services [such as] bill payment via online, mobile and telephone banking.” As for the future, Ms Aubyn says that focus will remain on assets growth and delinquency management.

Honduras

Banco del Pais

María del Rosario Selman-Housein, chief executive, Banco del PaisMaría del Rosario Selman-Housein, chief executive, Banco del Pais

María del Rosario Selman-Housein, chief executive, Banco del Pais

One of the poorest countries in Latin America, Honduras has been dogged by a turbulent political environment over recent decades, and its current government is struggling to introduce much needed structural reforms.

Despite some good economic news – last year the country was blessed with an exceptionally good harvest of coffee, which is now an important source of foreign-currency income – Honduras has not had a buoyant economic climate. However, thanks to new initiatives and improved processes, Banco del Pais displayed good financial results in 2010, and its growth prospects look bright.

Higher net profits, assets and Tier 1 capital are a reflection of greater sales and management efforts. The bank’s capital adequacy ratio was 10.6% in 2010, and its return-on-assets ratio was more than 3% – both indicators were the highest in the country. These results are particularly good considering that the bank’s most profitable market in the past, the real estate sector, experienced a severe contraction.

Thanks to improved procedures and analytical tools, Banco del Pais managed to keep non-performing loans (NPLs) at 1.57% of its total loan portfolio, almost half the national average and lower than its NPL ratio of 2009. Investment in new technology helped to provide a better service to customers. Its online banking platform was improved in terms of both security and ease of use.

Banco del Pais also pushed sales of international transfers, both sent and received, from outside the country, which experienced an average growth of about 33%. On the cost side, revised internal processes helped to keep expenses down.

Looking forward, chief executive María del Rosario Selman-Housein says: “We will focus on companies [trading with] the north triangle of Central America; cross-sale programmes; the development of electronic products and services. All of this [will be] complemented with an austere politic of expenses control”.

Hong Kong

HSBC

Hong Kong has a special significance for HSBC, not least because of its history in the country, but also its performance received special mention in the group’s annual business review.

In 2010, HSBC’s increase in profitability was driven by strong revenue growth, particularly in investment and insurance product sales and trade-related fees, which all resulted from improved economic conditions. HSBC’s Hong Kong operations reported pre-tax profits of HK$42.19bn ($5.42bn) in 2010, an increase of 16.2% on 2009.

The bank has been building on its position in the Hong Kong market, with particular strengths in residential mortgages, credit cards, life insurance and deposits.

Its number of premier customer numbers reached 500,000 in 2010, a year-on-year increase of 31%. The bank’s Advance proposition, which was launched in early 2010 to capture the mid-market segment, achieved a customer base of 670,000 by the end of the year.

Aside from these initiatives, the bank has been successful across its other business lines of commercial banking, payment and cash management, trade and supply chain, and global banking and markets, securities services and global asset management.

And of particular interest in the past year has been the explosion of interest in offshore renminbi, in which Hong Kong – and HSBC – have played a key role. The bank has been developing its offshore renminbi-related products and has ambitions of being a market leader for renminbi products in Hong Kong.

Along with this offshore renminbi boom, HSBC has been involved in a number of firsts in Hong Kong. It was the first foreign bank to settle cross-border renminbi trade in the country; the first bank to offer a renminbi trade finance standard rate in Hong Kong; and the first bank to issue a renminbi cashier’s order in Hong Kong.

Hungary

K&H Bank

Banking conditions in Hungary remain exceptionally difficult, as default rates on retail loans extended in foreign currencies to take non-performing loans (NPL) for most banks into double figures. A one-off bank tax has further eroded profitability, and the latest government plan to convert some foreign currency mortgages into Hungarian forints, combined with an exchange rate that is deeply unfavourable to the banks, pose an additional threat.

Any bank would struggle in the face of such headwinds, but K&H Bank seems to have handled the crisis better than its competitors, with a 171% rebound in profits in 2010. Despite the poor business conditions, operating profit before provisions and the one-off bank tax stayed relatively stable in the first half of 2011. And while provisions are rising, K&H’s NPL rate of 8.6% in 2010 was well below the national average, and the best among Hungary’s top five banks.

The bank cut costs by 3% in 2010, and streamlined its corporate banking franchise by shifting the smallest businesses into its retail segment, while maintaining a low churn rate of small business customers. The most successful retail product is the Zero account, which waives account fees for retail customers if they pay in their monthly salary to the bank. This attracted a 6% increase in customers using K&H for their salary deposits, which also provided opportunities to convert more customers into other longer-term savings products that generate extra income and more stable funding for the bank.

Similarly, while loan demand among small businesses has fallen sharply, K&H is gaining market share. The bank was the first to participate in the EU’s Jeremie small business financing programme, and trained up 600 members of staff to bolster its small business lending presence. This has helped attract 1400 new small business clients, and its share of new loans under E1m is higher than its existing market share.

India

Axis Bank

Shikha Sharma, managing director and CEO, Axis Bank

Shikha Sharma, managing director and CEO, Axis Bank

Axis Bank is one of the fastest-growing banks in the Indian market in terms of size and profitability. In the past financial year, the bank’s net profit increased by nearly 35% to Rs34bn (653m) compared to Rs25bn the year before. The banks assets also grew, year-on-year by 34% to Rs24bn from Rs18bn.

The Indian banking market has had its pressures in the past year, as Shikha Sharma, managing director and CEO of Axis Bank, explains: “Tight liquidity conditions and rising cost of funds were the main challenges faced by the bank. Uncertainties in the global financial markets were compounded by domestic inflationary pressures, which engendered a high interest rate environment.”

However, the bank has been able to gain market share and has performed well in terms of profitability.

“We have consistently achieved a healthy growth of business and profitability despite the period of stress in the environment. Our core businesses have grown well, generating diversified streams of revenues that have translated into robust margins and return on assets,” says Ms Sharma.

The bank is also well positioned to capitalise on the growth story of India. Ms Sharma says: “We will continue to strengthen our retail deposit franchise and also focus on areas in which the bank was previously under-represented such as retail lending. While the bank has a business composition that is well positioned to leverage the growth potential in the country, we are also viewing transactional banking and payments as a major area.”

One example of a payments service is the 2010 launch of Instant Money Transfer, which facilitates payments to unbanked people in India. Money can be withdrawn at an ATM with a mobile phone, which is used to receive all the information about the remittance.

Indonesia

Bank Rakyat Indonesia

Bank Rakyat Indonesia’s growth in the past year has mirrored the economic growth seen throughout Indonesia.

As the country’s rapid economic development takes hold, BRI is well positioned to be part of that growth as it specialises in lending to the micro, small and medium-sized enterprises (MSMEs). While it makes commercial sense for BRI to take advantage of its extensive network – which covers micro branches in the far-flung islands of the Indonesian archipelago – the micro lending also serves to be the backbone of the country’s economic growth.

More than 90% of Indonesian entrepreneurs can be classified as MSMEs, a segment that proved to be resilient to the Asian financial crisis in 1998 and more recently the global crisis in 2008.

BRI has continued to serve this segment and has expanded aggressively over the past years. While the bank has been a leader in the micro lending segment because of its expansive network, it recognises the huge potential of these micro businesses as they continue to grow along with the Indonesian economy.

At the end of 2010, BRI had 7004 outlets and the growth of its micro loans has increased seven-fold in the past 10 years, from Rp9840bn ($1.1bn) in 2001 to Rp7540bn at the end of 2010. At the end of the second half of 2011, BRI was the largest lender in Indonesia and 80% of its loans were to MSMEs.

In recent months, BRI has been improving the efficiency of its operations, with many working online in real-time. It has also established even smaller outlets as part of its network, which it describes as ‘sub-micro outlets’ so that the bank’s workers can access the traditional markets that have so far been untouched by banking services and have traditionally been the territory of loan sharks.

Iran

Parsian Bank

Since beginning operations in January 2002, Bank Parsian has seen continuous growth and is today Iran’s largest private bank.   

The bank achieved impressive growth across all key financial indicators in 2010. Net profits for the year increased by an impressive 41% to $531m, while assets grew 23% to $25.6bn. Tier 1 capital – the core measure of a bank’s financial strength – surged by 33% to $1.95bn.  

During 2010, Parsian was responsible for about 8% of total deposits and 7% of total loans within the Iranian banking system. This equated to a respective 36% and 25% market share among privately owned banks.

On the retail front, Parsian opened 42 new branches in 2010. The bank is also helping to pioneer the use of e-banking services in Iran – which are still largely underpenetrated – with about 72% of all Parsian’s transactions being processed via e-channels in 2010. In September 2010, a 10% stake in Parsian E-Commerce, the e-banking subsidiary of Parsian Bank, was successfully sold on the Iranian over-the-counter market in an initial public offering worth $116m.

Looking forward, the bank wants to become more engaged with modern Islamic financial activities and also move into the nascent investment banking sphere, for which licences only started to become available in 2007.   

“We believe that an active presence in the field of modern Islamic banking, such as the issuance of sukuk [Islamic bonds], will provide the bank with a promising opportunity to develop its financial activities in the coming year,” says Ali Soleymani Shayesteh, managing director of Parsian Bank. “We are also determined to add an investment bank to Parsian financial group.”

Israel

Bank Hapoalim

Zion Kenan, chief executive, Bank Hapoalim

Zion Kenan, chief executive, Bank Hapoalim

Bank Hapoalim was the only one of Israel’s largest banks significantly exposed to US subprime securities, and was further damaged by allegations of fraudulent loans made to a former chairman. But Yair Seroussi, appointed as the bank’s chairman in mid-2009 after the country’s regulator demanded a change at the top, has reshuffled the management team and reshaped the bank’s strategy. In the past 18 months, Bank Hapoalim’s transformation has begun to pay off.

Profits soared by 69% in 2010, taking the bank back to double-digit return on equity in line with its target. The performance continued into the first half of 2011, with Hapoalim recording the highest profitability in the sector. The bank also increased its capital adequacy beyond the 12.5% recommended by directors, to 14.1%, putting it in a position to protect itself from the risk of the global economic recovery faltering.

“During the year, Bank Hapoalim regained its undisputed leadership in the Israeli banking sector by executing its strategic plan, focusing on its core franchise and laying a foundation for sustainable double-digit returns. The bank also continued its technology leadership, as our website was again recognised as best in Israel, and we expanded our mobile banking activity,” says chief executive Zion Kenan.

The bank has launched a string of innovative iPhone applications, including one that allows money transfers between iPhones by touching them together, and another that lets the account holder photograph a utility bill which will be automatically paid. Clients can also access their account from around 100 other mobile devices. In a country of about 7.5 million inhabitants, Hapoalim’s online banking now has some 850,000 users who perform about 1.3 million information queries per day.

“In Israel, the bank will explore untapped retail opportunities and continue to lead the corporate credit market, while further expanding its global reach,” says Mr Kenan.

Italy

Intesa Sanpaolo

Corrado Passera, CEO, Intesa Sanpaolo

Corrado Passera, CEO, Intesa Sanpaolo

A big question mark was still hanging over Italy as The Banker went to press on its awards edition. Would it muddle through or would it fall under the vicissitudes of the markets and require an enormous bail-out?

Italian banks have had to plan for any eventuality and Intesa Sanpaolo successfully raised its capital so that it is already Basel III-compliant with a 10% common equity ratio – eight years ahead of schedule.  

CEO Corrado Passera says: “As Intesa Sanpaolo is for many investors a proxy for Italy, we have had the challenge of the negative sentiment towards the country in the market, which in no way reflects the strong fundamentals of the bank. The ineffective management of the sovereign debt crisis so far has left both Italy and Europe in need of firmer measures to boost economic growth and restore confidence.”

Despite this, Intesa Sanpaolo continued to grow its business, and its capital and liquidity positions remained strong. Dividend policy has not been revised. With a presence in 40 countries, the bank plays a key role in supporting the international strategy of Italian companies both big and small. China has been a central focus in recent months.

The bank’s commitment to small and medium-sized enterprises is demonstrated by the Intesa Sanpaolo Start-Up Initiative, which transforms technological ideas into business plans, raises capital and finds investors. Since its launch two years ago, 600 start-ups have benefited. Overseas, the bank’s Egyptian subsidiary Bank of Alexandria has been very busy in the microcredit space.

Jamaica

National Commercial Bank Jamaica

Patrick Hylton, group managing director, NCB Jamaica

Patrick Hylton, group managing director, NCB Jamaica

National Commercial Bank Jamaica closed 2010 with high net profits, larger assets and a stronger capital base. The bank launched new products, improved efficiency and took actions to limit the growth of non-performing loans. A new credit card was launched, the branch network was rationalised, new training programmes have been created for employees, and customers who may have struggled to meet their loan repayments were given advice on alternative ways to manage or offset banking fees.

Patrick Hylton, group managing director at NCB Jamaica, is proud of the bank’s successes. “National Commercial Bank Jamaica reported net profits of $11.07bn for the [2010] financial year, an 8.1% increase over the prior financial year; this meant we ended the year as the most profitable listed company on the Jamaica Stock Exchange,” he says.

The strategy for next year remains similar, adds Mr Hylton, but considering the changing conditions of international financial markets, there will be a greater push on specific products. “We remain focused on all product areas, [but] in light of a significant drop in market interest rates over the past year and a subsequent narrowing of spreads, we remain particularly focused on growing our loan and credit card portfolios and diversifying into non-interest-sensitive products, such as unit trusts and other collective investment schemes,” he says.

“In line with enhancements to the local securities regulatory regime, we [also] plan to introduce a new securities product within the next year.”

Japan

Mizuho Financial Group

Yasuhiro Sato, CEO, Mizuho Financial Group

Yasuhiro Sato, CEO, Mizuho Financial Group

The earthquake and subsequent nuclear accident have dominated much of the coverage of Japan this year. Mizuho Financial Group’s CEO Yasuhiro Sato says that the incident has been one of the major challenges for the organisation in the past year.

“Despite this, our net income achieved more than 80% against the full-year earnings estimate. We are making a full-scale effort to assist our customers and the damaged region as well as to contribute to the recovery of the business community,” says Mr Sato.

Another feature of the bank’s activities in the past year is its transformation plan. The plan, dubbed ‘Mizuho’s Transformation Program’ is a medium-term policy that focuses on improving profitability, its financial base and its front-line business capabilities.

Another of the organisation’s plans is to bring a unified management structure to the group, turning Mizuho into “one bank”.

As part of this effort, in April 2011, Mizuho announced that it intended to turn its listed subsidiaries – Mizuho Trust & Banking, Mizuho Securities, and Mizuho Investors Securities – into wholly owned subsidiaries of Mizuho Financial Group through a share exchange. “The integration of our banking subsidiaries will be in order to realise optimisation for the entire group, invigorate the organisation and to improve our management efficiency,” says Mr Sato.

Mizuho has also been focusing on the rest of Asia, and in November 2010 opened the Suzhou branch of Mizuho Corporate Bank (China). In November 2010, Mizuho acquired shares in asset management firm BlackRock and later signed a business alliance agreement with the firm for strategic co-operation in Japan and Asia.

Jordan

The Housing Bank for Trade and Finance

The Housing Bank for Trade and Finance (HBTF) performed noticeably well compared with its Jordanian peers in 2010 on the back of improved credit and investment policies and an increased focus on its core competencies – mainly in the area of retail banking.

The bank’s net profits after tax grew by 32.9% to $125m, while its total assets grew by 9.7% to $9.42m. HBTF has also continued to maintain a good liquidity ratio of 182%, well above the 100% stipulated by the Central Bank of Jordan (CBJ). The bank’s capital position has therefore remained strong, with a capital adequacy ratio of 22.5%, (more than the 12% required by the CBJ), and a Tier 1 ratio of 22.45%, again higher than the 6% set by the central bank.   

The bank’s strength in retail banking was evident in that more than 45% of its gross income in 2010 was derived from retail-related activities – its customer base (in excess of 900,000) represents more than 50% of Jordan’s bankable population. Furthermore, the bank has positioned itself as a market leader in the trade finance business, with a market share of more than 16% of letters of credit.   

As part of its plan to strengthen its presence in overseas markets and diversify its sources of revenue, HBTF acquired a 63.75% stake in the London-based Jordan International Bank in a deal worth $32m. It subsequently raised its capital to $56m, with HBTF’s stake growing to 68.57% by the end of December 2010.

HBTF also increased the capital of the International Bank for Trade and Finance – a subsidiary in Syria – by 67% to $103m, of which the bank now owns 49% to support its growth potential there.

“We compete strongly on the quality and pricing of products and services we offer. We have the largest network of branches and ATMs in the kingdom and we invest heavily in our staff and banking technology,” says Dr Michel Marto, chairman of HBTF. “Key opportunities lie in project finance, retail and regional operations,” he adds.

Kazakhstan

Halyk Bank

Kazakhstan’s second largest bank truly emerged from the financial crisis in 2011, with a $500m 10-year Eurobond deal in January marking the first offering by a Kazakh bank since the crisis began to bite in 2008. The bank’s market-leading deposit base gives investors confidence in its funding position. And in May 2011, the bank used its surplus capital to repay the 20% equity stake taken in Halyk by Kazakh sovereign wealth fund Samruk-Kazyna to stabilise the bank in January 2009.

“Thanks to strong earnings, we now account for more than half of the banking sector’s net income, and Halyk is the first and so far the only bank in Kazakhstan that has repaid government capital provided in 2009,” says chief executive Umut Shayakhmetova.

Profits were up 128% in 2010, and 99% in the second quarter of 2011. While the real estate market and credit conditions in Kazakhstan remain subdued, Halyk has focused on increasing its fee and commission income, especially in the retail segment. The bank has the largest number of active payment cards, and has secured tie-ups with online retailers. In addition, payroll processing clients rose 3.3% in 2010, strengthening the bank’s leading position in providing this service to companies and their staff.

“Most of our growth was technology-intensive, including advancements in mobile and internet banking solutions and payment cards. In the second half of 2011 we managed to increase our net interest margin by improving funding structure. We aim to actively grow our loan portfolio in 2012, continue expanding fee and commission business, and preserve the leading position in the market,” says Ms Shayakhmetova.

Kenya

Co-operative Bank of Kenya

Gideon Muriuki, managing director, Co-operative Bank of Kenya

Gideon Muriuki, managing director, Co-operative Bank of Kenya

Co-operative Bank of Kenya has come a long way in the past 10 years. In 2002, it was at rock bottom following a loss of almost $30m. By the end of 2010, it was the third biggest commercial lender in Kenya by assets, having made a net profit of Ks4.6bn ($59m) during the year. That amounted to a return on equity of 28% and was 54% higher than its earnings in 2009.

Much of Co-operative Bank’s success in 2010 was a result of its diversification in the past few years. It is now truly a universal bank, with substantial market shares in corporate banking, retail banking, stock-broking, fund management, advisory services, mortgages (which it started providing in the past 12 months) and insurance. “We have really focused on the diversification of our products,” says Gideon Muriuki, Co-operative Bank of Kenya’s managing director.

Thanks to this diversification, the lender has rapidly built up its retail customers. It now has about 2.3 million of them, having had 1.2 million a year ago. Its branch network has also expanded. “We have 91 and we want to open more,” says Mr Muriuki. “We plan to reach 125 during the course of next year.”

In retail banking, Co-operative Bank has focused heavily on improving its technology. Key to this is its mobile banking platform, which was upgraded during the year.

The lender has also been at the forefront of small and medium-sized enterprise banking in Kenya. It has developed several products aimed at different types of borrowers, including loans for female entrepreneurs and group loans.

Next year regional expansion will be high on Co-operative Bank’s agenda. It plans to start operating in South Sudan, which borders Kenya and gained its independence from Sudan in July. “South Sudan has huge potential,” says Mr Muriuki. “We want to go in as a bank that services rural areas.”

Kosovo

ProCredit Bank Kosovo

Philip Sigwart, chief executive, ProCredit Bank Kosovo

Philip Sigwart, chief executive, ProCredit Bank Kosovo

Even in difficult economic conditions, return on equity at ProCredit Bank Kosovo remains an impressive 32%. And while non-performing loans are rising, they remained very healthy by local standards, at 2.3% at the end of 2010. The bank operates with a development mandate rather than for shareholder returns. But its balance sheet strength is crucial to help build its resources for further lending to local small and medium-sized enterprises (SMEs), which constitute 75% of its total portfolio.

“While we have a very clear development focus and never put profits first, the returns for our shareholders were high in Kosovo. Our bank is an example that an institution with a strong development focus and a long-term vision can be commercially very successful,” says Philip Sigwart, chief executive of ProCredit Bank Kosovo.

The bank has increased its number of ATMs as well as introducing a new ATM-based product, Kos-Gyro, which allows customers to pay utility bills at ProCredit Bank ATMs by using newly installed barcode scanners. Despite this investment, the cost-to-income ratio declined in 2010, to 46% from 49%. And the bank maintained the momentum of its lending to SMEs, with assets up by just under 7% in 2010, despite the challenge of finding good-quality clients in tough times. This maintains the bank’s status as the largest and most active in Kosovo.

“Despite the difficult macroeconomic and political environment in Kosovo, we continue to believe in the long-term potential of the region. Therefore, we will continue to invest in training our staff, expanding our branch network and introducing new technologies,” says Mr Sigwart.

Kuwait

National Bank of Kuwait

National Bank of Kuwait’s (NBK) solid core business income streams, high asset quality and sustained cost controls have ensured that the bank continues to deliver very strong results despite the protracted global financial crisis. Profitability remained strong in 2010 with the bank recording a 14% rise in profits to Kd302m ($1.09bn), a return on assets of 2.4% and return on equity of 16%.

Its Tier 1 capital rose 24% during 2010 to Kd1.47bn and risks remained well managed, with capital adequacy standing at a healthy 18.3%, while non-performing loans declined from 1.8% in 2009 to 1.6% in 2010.   

With NBK’s market share continuing to grow both on the consumer and corporate sides of the business, it has continued to strengthen its leading position in the country. It remains the largest bank in the country with assets of Kd12.8bn.

By growing its stake in Kuwait’s Boubyan Bank over the past few years, NBK has made a strong move into Islamic banking. It increased its share ownership in Boubyan to 47.3% in May 2010. This has helped diversify income, given that Islamic banking has been gaining strength in the Kuwaiti market in recent years, comprising one-third of assets and deposits as of June 2011.   

Working closely with the management of Boubyan, NBK has positioned the bank so that it is able to compete with bigger local rivals. It is now emerging as a serious player in the Islamic banking market following an extensive restructuring plan initiated by NBK.   

“NBK continues to reap the benefits of a conservative strategy and strong risk management practices,” says Ibrahim Dabdoub, group chief executive of NBK. “Our asset quality remained outstanding by all international standards and consequently our revenue growth filters to our bottom line.”

In the first half of 2011 NBK has sustained its strong performance, delivering net profits of Kd146.7m – contributing half of the Kuwaiti banking sector’s profits.

Kyrgyzstan

Demir Kyrgyz International Bank

Sevki Sarilar, general manager, Demir Kyrgyz International Bank

Sevki Sarilar, general manager, Demir Kyrgyz International Bank

Despite political upheaval and rising security risks in Kyrgyzstan in 2010, Demir Kyrgyz International Bank increased its profits by 26%, and improvements continued into 2011. Corporate and small business loans rose by more than 4% in the first quarter of 2011, while the non-performing loan (NPL) ratio declined from 5.1% to 4.5% in the same period – compared with a system average of 13.6%.

“Demir Bank continued to support the business and economy of the country by offering attractive conditions for loans and tailor-made products. However, we also had to adjust our credit policy by choosing a careful and thoughtful approach,” says Demir’s general manager, Sevki Sarilar.

The perception of safety and good customer service allowed Demir Bank to attract deposits, which were up 32% year on year in the first quarter of 2011, despite the bank offering the lowest deposit interest rates in the sector. And the bank also won a $3m multilateral credit line to help co-finance projects for larger clients, as well as additional credit lines for trade finance.

The retail banking segment is also growing, with retail customers up 36% year on year in the first quarter of 2011, credit cards issued rising 16% and debit cards up 30%. Demir Bank has also become the first in Kyrgyzstan to arrange loyalty and discount programmes for its cardholders, applicable at about 150 retailers across the country.

“The bank continued to make investments in information technology, ATMs and the cards business, and introduced new banking products to the market, retaining our leading position in the cards market with a 51% share [in the country]. We will now focus on increasing our lending activity and presence on the market by extending branch, ATM and points-of-sale networks and introducing new banking services,” says Mr Sarilar.

Laos

Banque Pour Le Commerce Exterieur Lao

Sonexay Sitphaxay, CEO, BCEL

Sonexay Sitphaxay, CEO, BCEL

Banque Pour Le Commerce Exterieur Lao (BCEL) has gone through a transformation in the past year, from a state-run to a publicly owned bank, and is the first bank in Laos to register on the Lao Securities Exchange.

“We have put tremendous effort to improve our service, governance and structure to become a public bank and let people in the society share ownership of the bank,” says Sonexay Sitphaxay, CEO of BCEL.

The government put 30% of the shares in the bank up for sale; 20% for local investors and staff and 10% to a strategic partner. The change has pushed the bank into the next stage of its development, and BCEL’s focus has included developing its service network as well as its products.

“A rapid increase of banks in the past year, as well as increased competition in the Lao banking industry, have challenged our strategies. However, we have persisted on introducing new services to attract customers with reasonable fees,” says Mr Sitphaxay. “We are improving our core banking system to international standard in order to provide advanced banking for our customers,” he adds.  

Mr Sitphaxay notes that the bank has been able to expand its service network to cover the whole of Laos, which has meant that the bank saw a growth in deposits of 39% in 2010.

The bank has expanded its international network. It has also invested in its business with Cofibred, a subsidiary of the French bank BRED Banque Populaire. It has also invested in the joint venture Lao-Viet Insurance Company.

Latvia

SEB Banka

Ainars Ozols, chief executive, SEB Banka  in Latvia

Ainars Ozols, chief executive, SEB Banka in Latvia

No country in Europe suffered a deeper recession in 2009 than Latvia, but SEB Bank weathered the storm and returned to profit in 2010. Non-performing loans remain painfully high, but the bank is now getting to grips with its cost base, bringing down its cost-to-income ratio to 43% in the first half of 2011, from 59% in 2010. And in the second quarter of 2010, its credit portfolio finally began growing again after nine quarters of contraction.

“SEB in Latvia has continued to develop sound lending by carefully analysing customers’ solvency and granting funding to reasonable and well-considered projects. SEB strengthened its leading positions in the Latvian pension and long-term savings market, despite the complex economic situation and decreased level of income in the country,” says Ainars Ozols, chief executive of SEB Banka in Latvia.

SEB has improved processes to shorten the period for loan approvals, and has upgraded internet banking facilities to include dynamic data authentication on bank cards and e-signature capabilities to facilitate applications for new banking products.

The bank has also made efforts to support the country’s economic recovery, including an initiative to encourage its established clients to assist companies created in the past year. And SEB signed a deal with the European Investment Fund in 2010 to extend up to E44m to Latvian small and medium-sized enterprises (SMEs). By the first half of 2011, the bank had extended funds to more than 2400 SMEs, of which more than 1600 were newly established companies.

“The priority for SEB is to strengthen client relationships and to strive for excellence in service – speed, quality and professionalism of service. SEB will offer more beneficial solutions and fees for financial services to clients who have selected SEB as their home bank,” says Mr Ozols.

Lebanon

Blom Bank

Saad Azhari, chairman and general manager, Blom Bank

Saad Azhari, chairman and general manager, Blom Bank

Blom Bank achieved the highest profitability ratios among Lebanese-listed banks in 2010, earning a return on average equity and return on average assets of 18.67% and 1.44%, respectively. It also reported a healthy 7.93% rise in assets to $22.34bn in 2010 and a respective 12.83% and 11.61% rise in net profits and Tier 1 capital.

In January 2010, in recognition of the fact that Lebanese banking has historically favoured middle-market traders and businessmen, Blom launched a simple real estate-based loan product to help small businesses expand into new locations. At the end of 2010, the product’s loan portfolio stood at $9.9m, with an average loan amount of $154,000. By June 2011, these figures had risen to $19m and $174,000, respectively.  

Blom also created a syndication and structured loans department within its corporate banking division in December 2010 to focus on complex and large loans, many of them regional.

According to Saad Azhari, Blom’s chairman and general manager: “The main challenges to Blom Bank have been the operating environment, characterised by financial and debt crises globally, as well as political upheavals regionally. These developments caused the bank and the entire Lebanese banking system to grow at less than [they have in] the past three years.”  

However, the bank’s conservative business model and sound risk management have allowed it to weather these challenges and to continue with its measured growth.

“We believe that the region – the current political upheavals notwithstanding – is rife with opportunities in the medium to long term, given its favourable demographic and economic growth prospects,” says Mr Azhari.

“We look to further our presence in the countries we are already in and in new countries in the region, providing banking and financial services that [fit] both the market potential and our comparative strength.”

Lesotho

Standard Lesotho Bank

Mpho Vumbukani, head, Standard Lesotho Bank

Mpho Vumbukani, head, Standard Lesotho Bank

Economic growth in Lesotho has been muted in the past two years. But despite this, Standard Lesotho Bank, a subsidiary of South Africa’s Standard Bank, has managed to achieve very high profits. In 2010, net profits rose 7% to 164m maloti ($21m). This was a huge return on equity (ROE) of 45%, and followed an ROE of 52% in 2009.

Standard Lesotho Bank managed to attain this profitability while maintaining strong levels of capital. Its assets grew 16% in 2010 to 4.8bn maloti, while its Tier 1 capital rose 20% to 395m maloti.

The bank has also managed to keep expenses on a tight lease. Its cost-to-income ratio in 2010 was a low 49%. Its non-performing loans, moreover, amounted to just 1.4% of its portfolio at the end of the year.

Part of the lender’s success amid a sluggish economy has been a result of easing conditions for providing working capital loans to small and medium-sized enterprises (SMEs). Following research done at Harvard University, the bank now uses psychometric testing to assess some potential SME clients. This requires no paperwork on the part of borrowers and allows the bank to supply unsecured loans, which is a big help in a country where many SMEs lack collateral.

Mpho Vumbukani, head of Standard Lesotho Bank, says that such SME lending will be one of the bank’s priorities next year too.

Also in the past year, Standard Lesotho Bank won the mandate to manage a big proportion of the government pension fund after it was privatised.

Luxembourg

BGL BNP Paribas

Eric Martin, CEO, BGL BNP Paribas

Eric Martin, CEO, BGL BNP Paribas

The current economic environment is far from ideal for any bank carrying out an  integration. Despite this, BGL BNP Paribas managed to complete the integration of 500 business activities with less than a year’s preparation. The icing on the cake has been the upgrading of the bank’s financial strength rating in September. The bank’s solvency ratio is now a healthy 23.1%.

BGL was originally part of Fortis, which failed in late 2008 and has now been merged with BNP’s Luxembourg operation. Net banking income for 2010 of E797.6 m included a contribution of about E141 m from BNP Paribas Luxembourg, which has been consolidated from 25 February 2010.

All along, BGL BNP’s emphasis has been on client service. The Luxembourg retail and corporate banking business line posted net banking income of E318 m, with lending up 6.5% for individual clients and 3.9% for professionals. Income from bancassurance operations rose by 29%. BGL BNP Paribas is Luxembourg’s top private banker with assets under management rising 6% last year.

CEO Eric Martin says: “We feel that our main success was to manage a successful integration of BGL and BNP Paribas with less than one year’s preparation. More than 600 people worked in shifts over 56 consecutive hours to coordinate and complete the merger of 500 multi-business and multi-entity activities. In addition to this major achievement, we have enlarged our offer by developing innovative products and services and managed to improve our financial strength rating.”

Macao

ICBC (Macau)

Zhu Xiaoping, chairman of the board, ICBC (Macau)

Zhu Xiaoping, chairman of the board, ICBC (Macau)

ICBC (Macau) has been operating in an environment that has seen growth in recent months in terms of the number of visitors, property sales and infrastructure projects that have been approved. The bank coped with this rapid development with a share issue in 2010 and expanded its business in the local credit market to become the arranger of major syndications, which has generated an increase in its fee income.

ICBC (Macau) has worked to improve its capital strength, enhance its network and channels and diversify its products and services. Part of the new business ICBC (Macau) has been working on is being involved in the renminbi business, which has been growing exponentially in the past year. “We seized the pre-emptive opportunities of renmnibi business development in Macao,” says Zhu Xiaoping, chairman of the board of ICBC (Macau).

Because of the strength of its parent company, ICBC (Macau) can draw on the IT platforms and systems that have been developed by the group. Mr Zhu says that one of the major achievements of the bank over the past year has been to converge with the internationalisation of ICBC Group.

“Macao not only served as an economic co-operation platform, but also played an important role in the financial communication between China and Portuguese-speaking countries. Our bank will make complete use of this advantage and grasp the opportunity of the central government’s policy to develop [the island of] Hengqin. We will also focus on the retail business and renminbi business in Macao as well as affording global financial services to mainland enterprises,” says Mr Zhu.

Macedonia

Komercijalna Banka AD Skopje

Hari Kostov, chief executive, Komercijalna Banka

Hari Kostov, chief executive, Komercijalna Banka

The Macedonian central bank urged local banks to increase capital levels last year, and Komercijalna Banka successfully raised E15m in February 2011. Investor interest in the bank is understandable, given that the bank earned about 60% of all profits in the Macedonian financial sector in 2010, with return on equity rising more than two percentage points to 17.9%.

“We are proud to say that in 2010 the bank has continued the trend of stable and profitable performance. The gross profit was 33.2% higher than the profit realised in 2009, assets grew by 16.7%, deposits by 16.6% and loans to customers by 5.1%,” says Hari Kostov, chief executive of Komercijalna Banka.

The bank has been increasing its branch and ATM network, especially outside of Macedonia’s capital city of Skopje, while strengthening its technology offering. Completed projects include allowing card PIN changes and payments to mobile phone providers through the bank’s ATMs, as well as beginning to exchange data with a newly established Macedonian Credit Bureau.

The bank has a strong 30% share in small business banking, reinforced over the past year through a credit line for E23m from the European Investment Bank, and loans worth E196,000 from the International Fund for Agricultural Development. Continued lending in Macedonia’s real economy has been facilitated by good risk management, which allowed non-performing loans to fall to 5.4% in 2010, from 6.2% in 2009.

“The bank will continue preserving portfolio and deposit base stability, under the pressure of external instability caused mainly by the debt crisis in Europe. It will further improve and modernise its operations, introduce new banking products and services, develop new modern banking functions, advance its e-banking and information technology and maintain and increase its market share, thus providing long-term sustainability, profitability and growth,” says Mr Kostov.

Malawi

Standard Bank

Charles Mudiwa, head, Standard Bank in Malawi

Charles Mudiwa, head, Standard Bank in Malawi

Malawi’s banks have faced worsening conditions in the past 18 months. A dire shortage of foreign currency has resulted from weak sales of tobacco (by far Malawi’s biggest export) and donors cutting aid in response to worries about a deteriorating political environment (19 people were killed by police during riots in August over fuel shortages and economic mismanagement).

“The main export, tobacco, performed dismally, which constrained supply of foreign exchange into the import-dependent economy,” says Charles Mudiwa, head of Standard Bank in Malawi. “The situation worsened when donors unplugged budgetary support over concerns about economic and political maladministration. Consequently, the bank struggled in financing import trade.”

Standard Bank’s profits fell 15% in 2010 to K2.4bn ($16m) partly as a result of these problems. But it still attained a high return on equity of 25% and a return on assets of 6.6%, one of the highest levels in Africa.

Standard Bank did this largely by focusing on corporate banking. It carried out more than $100m-equivalent of structured trade and commodity finance deals with tobacco merchants, while $27m was disbursed to a fertiliser subsidy programme and $21m of medium-term financing was provided to two telecoms firms.

Next year, the lender is keen to target other growing industries. “Malawi has a number of emerging sectors such as mining, textiles and tourism,” says Mr Mudiwa. “So the bank will strengthen business connections with the players in these sectors. And personal lending and agriculture financing will receive special attention.”

Malaysia

Public Bank

Malaysia’s banks are competing in a market where competition is intensifying and interest margins are narrowing.

“Despite these challenges, Public Bank delivered another year of solid profit growth on the back of sustainable revenue growth, efficient cost management and superior asset quality, while maintaining prudent banking practices,” a senior executive at the bank says.

In 2010, the bank’s net profit grew by 21.1% to RM3.05bn ($957.8m) from RM2.52bn in 2009. Public Bank’s domestic loans grew by 14.5% and growth in customer deposits was 14.8% for the same period.

The bank’s management states that it maintained a leading position in domestic lending. Residential mortgages, commercial property loans and vehicle financing have market shares of 17.7%, 34% and 25.8%, respectively.

The bank also performs well compared to its peers in terms of return on equity, asset quality, productivity and cost efficiency.

Its strategy is to keep retail consumer and commercial banking as its core focus. Public Bank has set itself service delivery standards such as the standard waiting time and the turnaround time to process, approve and disburse a loan. In 2010, 78% of the branches achieved the two-minute standard waiting time.

As well as continuing to promote consumer lending, Public Bank aims to continue to expand the scale and scope of its fee- and transaction-based revenue to sustain long-term profitability growth and a high return on equity.

The bank has launched a number of initiatives to further expand its business. This includes ING Public Takaful Ehsan, a joint venture with ING that provides sharia-compliant family insurance. This joint venture is expected to expand Public Bank’s fee-based revenue activities.

Mali

Ecobank Mali

Ecobank Mali came through 2010 strongly. Its net profits rose 25% to $10.7m, following an already impressive 9% growth in net earnings in 2009.

The bank’s asset base expanded 12% in 2010 to $532m. But it increased its Tier 1 capital by slightly more – 15% – to bring it to $39m and strengthen its capital position.

Ecobank’s profits for 2010 amounted to a hefty return on equity of 27%. It has managed to attain steady (and high) returns over the past few years, having made returns on equity of 25% and 29% in 2009 and 2008, respectively.

Importantly, the bank boosted its productivity in 2010 by reining in costs. This led its cost to income ratio to fall from 63% in 2009 to 58% in 2010. Ecobank says that cutting operational costs was one of its main goals last year. It has continued doing this in 2011, which will likely increase its profitability over the long term.

The bank enhanced its coverage of the small and medium-sized enterprise market in 2010. It introduced ‘Product Programs’ that are personalised for different businesses. These include ‘PP Equipment’, which provides companies with equipment financing.

Ecobank launched new products to boost its fee-based revenues. Among those was its ‘Rapid Transfer’ service, which allows for immediate transfers of money between any two Ecobank branches, including those outside Mali. The service is available to anyone, including non-account holders.

Malta

HSBC Bank Malta

Alan Richards, CEO, HSBC Bank Malta

Alan Richards, CEO, HSBC Bank Malta

Around Europe these days, few banks are notching up 20%-plus returns on equity (RoE) but in Malta,  HSBC came in with an impressive 24.9% RoE. In addition to this, net profits grew 16.7% while Tier 1 capital grew by 5.6%.

CEO Alan Richards says: “HSBC Bank Malta has managed to deliver an exceptional performance across all businesses and continued to offer security and peace of mind to its customers despite the difficult environment. This reflects the soundness of our business. The bank remains committed to putting the customer at the centre of everything it does and to deliver a high-quality service. We remain at the forefront of Maltese financial services as the leading international bank in Malta and continue to deliver the best value for our shareholders.”

As a way of enhancing the customer experience the bank took measures to improve systems, streamline processes and use the latest technology. An initiative called ‘Programme Impatt’ was started in 2010 to upgrade functions and services – as a result many customers are using automated channels for their everyday banking needs.

While Malta is developing as an international financial centre, HSBC Bank Malta has not lost sight of the needs of local clients. The bank is active in the small and medium-sized enterprise market and secured €100m from the HSBC global $5bn international fund to support local businesses.

Interim results for 2011 show that the strategy is continuing to produce good results, with an even higher RoE of 28.6%, an improved cost-efficiency ratio (44%) and a further rise in profits of more than 19%.

Mauritius

Barclays Mauritius

Ravin Dajee, managing director, Barclays Mauritius

Ravin Dajee, managing director, Barclays Mauritius

Barclays Mauritius has had a profitable past few years. Its pre-tax earnings in 2010 were MRs2.4bn ($79m), amounting to a return on equity of 27%.

The bank was able to achieve such a high profitability despite its assets rising only 7% during the year to MRs92bn (it boosted its capital buffer significantly, however, growing its Tier 1 capital by 50% to MRs7.6bn).

Barclays did this partly by exploiting Mauritius’s status as a hub for offshore companies. The island has double taxation treaties with many emerging markets in Asia and Africa, and the ability of Barclays Mauritius to link its customers with its parent company’s wide network in these regions has been beneficial. Barclays Mauritius’s offshore arm now accounts for 60% of its business. “If a UK corporate wants to invest in Africa, it makes huge sense today to incorporate the company in Mauritius and invest from here,” says Ravin Dajee, managing director of Barclays Mauritius. “Having a network in Africa is a huge selling point for us. We’ve managed to connect our customers to different businesses in Africa.”

Yet Barclays has also boosted its onshore activities. In particular, it has been at the vanguard of banks’ efforts to improve the access to credit for small businesses, which make up about 35% of the Mauritian economy and employ 40% to 45% of its people. Barclays, about 30% of whose loans are to such companies, has taken several initiatives in this regard, including hosting seminars about small and medium-sized enterprise (SME) banking and offering a wider array of products to borrowers, such as bundled current accounts and supply-chain finance.

Barclays admits that lending to SMEs is risky, given their often poor governance structures and lack of assets. But it has kept its non-performing loans ratio to less than 1% in recent years and believes that this figure can be sustained.

Mexico

Banorte

Amid a worsening of the global financial markets and widespread economic decline, Mexico and its banks provided one of the few positive stories of 2010. The country’s economy is recovering from the impact of the US’s slowdown, and its banking system has grown into a solid and strongly supervised market.

Banorte’s net profits grew by 15% in 2010 and return on equity was 15.5%, both higher than the previous year. Its loan portfolio started growing again, after showing a dip due to the effects of the international financial crisis, as did deposit levels. A low-interest-rate environment in Mexico forced Banorte to review its funding strategy and the bank successfully maintained an appropriate funding mix to keep cost of funding down. The bank also grew its branch network, opening 44 new branches last year, and additional geographical coverage has been achieved in 2011.

The merger with Ixe Grupo Financiero, which will create the third largest financial institution in Mexico, has also provided additional 165 branches to Banorte’s network; while its alliance with Cardtronics will give Banorte’s customers access to a wider network of ATMs.

Chief executive Alejandro Valenzuela is proud of the bank’s achievements and believes that the expansion strategy will deliver even better results than are being initially anticipated. He says: “We haven’t lost track of our [ultimate goal] so the numbers are being delivered; at the same time we’ve dealt with the integration of Ixe, and the synergies are going to be above our initial expectations.”

Continued effort was also put into strengthening the bank’s fundamentals and corporate governance and, in early 2011, Banorte announced the appointment of former Mexican central bank governor and finance minister Guillerme Ortiz as the new chairman of the bank.

Moldova

Victoriabank

The banking sector in Moldova is still at an early stage of development, weighed down by low profitability and poor asset quality. But Victoriabank enjoyed a strong recovery in 2010, with profits up more than 170% and assets expanding by 32%. The bank rolled out a series of initiatives designed to maintain this growth, including a point-of-sale lending programme with a retail chain store, loans with preferential interest rates for loyal customers, and mortgages for buying real estate in a newly built residential complex.

The bank has increased its branch network by 15% over the past year, and successfully sought international funding, both bank loans and certificates of deposit, in order to provide cheaper lending at home. As expatriate remittances are an important element of the Moldovan economy, Victoriabank has focused on payments, implementing two new transfer systems, Privat Money and Zolotaya Koruna.

The bank now has a market share of 18% in remittance transfers into Moldova, and has the largest network of correspondent banks – 15 in total, including a low-cost transfer offering from neighbouring Romania.

Taking a lead in the provision of bank cards, Victoriabank provides two so-far unique products in Moldova, a Visa Platinum card for affluent customers, and the Shop&Fly card in association with Air Moldova, designed to provide benefits to frequent flyers.

“Our main goal is to increase the area of services provided to the population through implementing more useful and available projects. This will stimulate our clients and business partners to become accustomed to a European level of co-operation,” says chief executive Natalia Politov-Cangas.

Mongolia

Golomt Bank

John Finigan, CEO, Golomt Bank

John Finigan, CEO, Golomt Bank

John Finigan, CEO of Golomt Bank, describes Mongolia as the epicentre of global growth. “It is the alpha on China’s beta,” he says.

But this environment of rapid growth has brought its own pressures. “The biggest challenge facing all of Mongolia’s banks is retaining standards of operating efficiencies,” he says.

Part of this has included strengthening the corporate governance and risk control at the bank, which in the past year introduced a revised corporate charter, shareholders’ meeting procedures, board procedures, board committee procedures, a conflict of interest policy and a policy statement on corporate governance. The bank also expanded its board of directors.

In 2010, Golomt Bank’s net profits had increased year on year by 52.3% to Tg20bn ($15.95m). Mr Finigan points out that the bank has doubled its asset size in the past two years. Such rapid growth has brought challenges in retaining the bank’s culture and efficiency, upgrading and improving its IT networks, and maintaining the best employees in a very competitive environment. Mr Finigan says that the main success of the bank has been in maintaining its operating metrics and low non-performing loans (NPLs) in such a rapidly changing market. The bank’s NPL ratio reduced from 4.4% in 2009 to 2.1% in 2010.

In the past year, the bank has opened 21 new offices and increased its number of ATMs by 40%.

Mr Finigan says that the bank does not have problems, only opportunities. For the future, he plans to focus on keeping the foundations of the bank sound so that it can continue to keep apace with the developments of the rapidly changing Mongolian market. “Evolution, not revolution,” is Mr Finigan’s mantra for the years ahead.

Montenegro

Erste Bank AD Podgorica

Aleksa Lukic, chief executive in Montenegro, Erste Bank

Aleksa Lukic, chief executive in Montenegro, Erste Bank

With its small, open economy and dependence on trade with the EU, Montenegro has been exposed to events in the eurozone. But Erste Bank Montenegro has stayed on course, with a big recovery in profitability in 2010 taking return on equity to 9.3%, from just 2.9% the year before. Cost control has also made a significant contribution, with Erste’s cost-to-income ratio declining by almost eight percentage points to 52.6%.

“Preserving our position among the top financial performers and achieving growth in all market segments with the undergoing intensive external and internal transformation was the main challenge for us, and we succeeded in this. A growth in market share and financial performance was achieved while maintaining asset quality above the targeted level. And we increased the number of employees by 10% while still achieving a decline in the cost-to-income ratio,” says Erste Bank’s chief executive in Montenegro, Aleksa Lukic.

The total market share in Montenegro for the bank increased by 2.7 percentage points for loans (to 8.8%) and by 1.2 percentage points for deposits (to 7.3%). This was fuelled primarily by a very active approach to the small and medium-sized enterprise segment, where the bank’s loan volumes grew by a remarkable 79% in 2010, mainly in the food processing, tourism and trade sectors.

The bank also co-operated with a government-subsidised programme to provide mortgages at reduced interest rates for public sector employees. It also offered existing retail customers the chance to extend loan maturities, thereby lowering monthly instalments to help stimulate the local economic recovery.

“We will work to provide financial resources to clients to assist them in overcoming the crisis, while maintaining moderate growth and great performance indicators. Private initiatives are the key for the prosperity of the whole of society,” says Mr Lukic.

Morocco

Attijariwafa Bank

Morocco’s Attijariwafa Bank continued its brisk growth in 2010, increasing its Tier 1 capital by 15% to Dh19.7bn ($2.4bn) and its net profits by 15% to Dh4.7bn. The latter figure amounted to a high return on equity of 20%. It also managed its expenses well in 2010, keeping its cost-to-income ratio to a low 44%.

Attijariwafa, having expanded outside of Morocco into the Maghreb and much of west Africa, is now the biggest bank in those regions and the fourth largest in Africa by Tier 1 capital. This year, it completed acquisitions of banks in Mauritania and Cameroon, and launched operations in Burkina Faso.

These subsidiaries complement its existing ones in Tunisia, Côte d’Ivoire, Senegal (where it is the biggest lender), Mauritania, Mali, Cameroon, Gabon and Republic of Congo.

Attijariwafa still derives the bulk of its revenues from Morocco, however. Here, it was particularly busy over the past year, developing new products for small businesses, which struggle to access credit from local banks.

Attijariwafa’s new offerings included Hissab Bikhir, a product for low-earning and unbanked Moroccans. The bank also introduced loans targeted at people wanting to finance real estate projects and made a push into the agricultural sector, providing more credit and services such as insurance to farmers and businesses connected to farming.

Next year, Attijariwafa plans to expand its operations in the region further. It also wants to develop recently launched products, including a programme to support and finance Moroccan students studying in France.

Mozambique

Millennium BIM

Manuel Marecos Duarte, head, Millennium BIM

Manuel Marecos Duarte, head, Millennium BIM

Mozambique’s banks are among the world’s most profitable, the largest ones having regularly generated returns on equity (ROEs) in excess of 30% in the past five years.

Millennium BIM, the largest lender in the country, exemplified this with its performance last year. Its net profits rose 17% to 2.25bn meticais ($70m), amounting to an ROE of 32%. Its cost-to-income ratio, moreover, was a low 45% and bad loans made up just 1.1% of its portfolio.

The bank, controlled by Millennium BCP of Portugal, Mozambique’s former colonial ruler, has focused heavily on expanding its services among unbanked Mozambicans, who are thought to make up as much as 90% of a population of 24 million. “The strategy of developing a countrywide branch network is still a challenge, not only because of the uneven economic [conditions] in Mozambique, but also because of demanding general operating conditions,” says Manuel Marecos Duarte, head of Millennium BIM. “Despite the progress made, infrastructures such as roads, energy, water and telecommunications are still to be built or improved in some districts.”

But thanks to its expansion, often into districts where no other banks operate, Millennium BIM took on its one-millionth customer this year, having had 860,000 at the end of 2010. “We have been pioneers,” says Mr Duarte. “We changed the paradigm of the Mozambican banking sector by expanding it far beyond its historical borders.”

The bank has also improved its services for existing clients. It has expanded its ATM network and upgraded its mobile banking technology so that customers can perform all transactions on their phones, except for cash withdrawals. It also introduced consumer loans for university students to pay tuition fees.

In the corporate market, the lender has been targeting businesses supporting Mozambique’s rapidly growing mining industry, including caterers and transport and construction companies.

Namibia

First National Bank of Namibia

Ian Leyenaar, chief executive, First National Bank of Namibia

Ian Leyenaar, chief executive, First National Bank of Namibia

First National Bank (FNB) of Namibia, the country’s oldest lender, has attained high profits over the past few years and has done so in a steady manner.

Last year was no exception. FNB made net profits of N$410m ($52m), a rise of 16% from 2009. Its return on equity (ROE) was a high 26%. This compared with ROEs of 28% in 2008 and 26% in 2009.

The majority of the growth in profits has come from the bank expanding its loan portfolio. Its assets grew 10% in 2010 to N$17.2bn. But it maintained a strong level of liquidity; its Tier 1 capital rose 21% to N$1.7bn. FNB’s level of Tier 1 capital is almost double the minimum level set by the Bank of Namibia.

FNB is also the most efficient bank in Namibia in terms of its cost-to-income ratio, which was 49% in 2010. It was less than 50% for the previous two years as well.

The bank’s risk management has been good. At the end of past year, its non-performing loan ratio was just 2.2%, down from 2.7% 12 months earlier.

FNB has focused a lot on corporate customers, including small businesses, in the last year. But it has also attempted to tap more unbanked Namibians, who make up about half the population of 2.2 million. “We constantly try and find new ways to make banking available, easy, affordable and secure to all Namibians,” says Ian Leyenaar, FNB’s chief executive.

Among FNB’s recent initiatives in retail banking, it launched a scheme to provide staff of corporate clients with pension-backed loans. It predicts this will see its market share for home loans rise from 39% to 42%.

Nepal

Bank of Kathmandu

Ajay Shrestha, CEO, Bank of Kathmandu

Ajay Shrestha, CEO, Bank of Kathmandu

Nepal is recognised as a market where the majority of the population does not have access to financial services, and Bank of Kathmandu is one of the banks that is aiming to make the most of the opportunity.

In the past year, the bank has taken a number of steps to strengthen its internal management and has realigned its strategy towards targeting a larger portion of Nepal’s unbanked population.

Ajay Shrestha, CEO of Bank of Kathmandu, says that the bank has tackled the challenge of growing across all customer segments and maintaining healthy margins. “The recent liquidity squeeze in the market has limited the areas of growth,” he says. The bank has been expanding its activities predominantly in semi-urban areas. “The bank has been forced to realign its marketing plan, to make new investments and build a supportive culture,” adds Mr Shrestha.

“The entire marketing set-up and orientation of the bank have been re-engineered,” says Mr Shrestha, explaining that a major focus is now on increasing the bank’s customer base. “More retail-oriented products and services have been added to reach large segments of customers. Even the bank’s corporate and social responsibility programmes are driven by the objective of educating people with regard to the use of financial services.”

One example of this is Bank of Kathmandu’s ‘Save for the Future’ campaign, in which the bank encouraged Nepalese people to get in the habit of saving. As part of this campaign, the bank has also raised awareness of registering children’s births.

For the year ahead, Mr Shrestha says: “Further intensifying the penetration effort will continue to be the primary focus of the bank in the coming year… [it] will also focus on safeguarding its portfolio, exploring market consolidation opportunities, strengthening the capital base and further building its marketing.”

Netherlands

ING Bank

In need of government support during the financial crisis and under pressure to separate banking and insurance operations by EU competition authorities, ING Bank staged a dramatic recovery in 2010.

The full disengagement of banking and insurance arms came into effect at the start of 2011, but the operational work to achieve this separation clearly did not distract the staff of the bank from the core activities.

Profits rebounded more than 550%, taking return on equity to 13.9%, which was very healthy by eurozone standards. Thanks to strong capital generation, ING was able to repay a second tranche of support from the Dutch state out of retained earnings in May 2011, and could repay all remaining support by May 2012 if market conditions allow.

“Despite turbulent market conditions, we were able to further improve our service level for both our private and business clients while maintaining solid financial results. Our relentless commitment to our clients is in turn reciprocated by Dutch corporate clients who have voted ING as the best bank in the Netherlands in the overall relationship management index. Our Corporate Clients Netherlands unit ranks first in total market penetration,” says Hans van der Noordaa, ING Bank management board member.

The launch of a balance sheet optimisation approach for corporate clients during 2010 proved particularly timely. ING analyses a client’s balance sheet to create a tailor-made integrated solution, instead of offering a patchwork of products. In circumstances of tightening liquidity for companies, this service proved highly attractive, driving a 35% increase in corporate banking business  in its first year of operation.

“We will continue to work hard to earn and maintain our customers’ trust through transparent products, value for money and superior service,” says Mr Noordaa.

New Zealand

ASB Bank

Barbara Chapman, chief executive and managing director, ASB Bank

Barbara Chapman, chief executive and managing director, ASB Bank

New Zealand has a lot in common with other markets in the Asia-Pacific region: it has been affected by uncertainty in the global economy, and has also been hit by natural disaster.

 “Supporting our customers and community following the devastating earthquakes in Christchurch has been a key challenge and priority,” says Barbara Chapman, chief executive and managing director of ASB Bank.

ASB responded to the earthquakes in Christchurch with relief packages for its customers, such as providing 12-month interest-free terms to small business customers and a fund of NZ$100m ($74.83m) to encourage new business growth in the region.

However, what ASB Bank is perhaps best known for is its investment in distribution channels and investing in technology in its branches. The bank has continued to refurbish its existing branches and introduce cash-counting machines, in-branch internet terminals and a dedicated concierge service. The in-branch video technology, which enables customers to immediately speak to a specialist via video phone, has reduced overheads and created a more efficient service. Going beyond the branch, the bank has taken its services into the virtual world through the launch of a virtual branch for Facebook.

“ASB is investing to realise future growth opportunities based on our customers’ changing needs, achieving success through several customer and community initiatives,” says Ms Chapman.

She gives the ASB GetWise financial literacy programme as an example of such an initiative. To continue with the initiatives and the bank’s strategy, Ms Chapman highlights the importance of human resources. “Developing our people to continue to provide outstanding service will be key,” she says.

Nicaragua

Banco de la Produccion

Luis Rivas, general manager, Banco de la Produccion

Luis Rivas, general manager, Banco de la Produccion

The international financial crisis had repercussions on the relatively small banking market of Nicaragua. Financial activity in the country has been slowing since 2008 and, most crucially, loans to small and medium-sized enterprises (SMEs) contracted by 25%.

While it may have been tempting to shy away from the struggling SME sector, Banco de la Produccion invested in a marketing campaign to advertise services and products tailored to SMEs and attract a wider share of the market. As a result, and despite the worsening economic conditions, the bank’s SME loan book decreased by only 10% – less than half the national average – while the bank’s SME market share within Nicaragua grew to 32% in 2010, from 26% in 2008 (no data is available for 2009). Banco de la Produccion also launched initiatives to reward innovative small entrepreneurs in

Nicaragua, with a particular focus upon rural areas. Further, the bank was one of the only three lenders in the country to grow its total loan portfolio in 2010.

In an effort to retain customers, Banco de la Produccion concentrated on providing better customer service while focusing on growing the number of cheaper deposits products, a strategy that paid off and resulted in a larger deposit market share. Security of online banking transactions improved and new services were added to the mobile banking platform.

Banco de la Produccion closed 2010 with slightly lower net profits but much larger assets, which grew by 23.5% – giving it one-third of the total banking assets of the country.

Niger

Ecobank Niger

Moukaramou Chanou, managing director, Ecobank Niger

Moukaramou Chanou, managing director, Ecobank Niger

Running a business in Niger is far from easy. The vast west African state is one of the world’s poorest, with a gross domestic product per person of only about $350. It ranked second last out of 187 countries in the United Nations’ latest human development index, beating only the Democratic Republic of Congo.

Real economic expansion is forecast to be 5% this year. But Niger’s growth is volatile and, being a largely agrarian economy, dependent on levels of rainfall.

Given these trying conditions, Ecobank has been highly successful in the country. Its assets rose 16% in 2010 — despite the economy being hurt by a military coup early in the year — to CFA Fr116bn ($247m). It made net profits of CFA Fr1.8bn, which amounted to a high return on equity of 23%.

Ecobank’s growth has been in large part a result of its commitment to invest in branches. It now has 20 in Niger, which has helped it raise deposits fairly quickly.

Ecobank also launched mobile banking recently through a partnership with telecoms group Airtel. This has allowed more of Niger’s population, the vast majority of which is unbanked, to gain access to banking services. It has also contributed significantly to Ecobank’s revenue growth, says Moukaramou Chanou, the lender’s managing director.

In the corporate market, Ecobank has increasingly targeted small businesses. It now has more than 2000 such customers and also works with development agencies to provide credit to them.

Next year, says Mr Chanou, Ecobank will target Niger’s nascent oil and mining industries.

Nigeria

Guaranty Trust Bank

Segun Agbaje, head, Guaranty Trust Bank

Segun Agbaje, head, Guaranty Trust Bank

Guaranty Trust Bank (GTB) has long been well regarded by international investors. Testifying to this, it issued a $500m five-year bond in May, becoming the first Nigerian corporate borrower to issue a benchmark (at least $500m) Eurobond.

Its attractiveness is in large measure down to its profitability. It made net profits of N37bn ($231m) in 2010, amounting to a return on equity (ROE) of 17%, the highest level among its rivals in Nigeria.

This year should be better still. Following strong third quarter results, it is on course to make an ROE of 23% to 25%.

The bank, which has traditionally focused on corporate business, has substantially expanded its retail banking arm in the past year and now has 3 million such customers. Its strategy has included launching Nigeria’s first e-branches (also known as electronic or express branches), which are self-service and allow customers to carry out 80% of their banking needs.

The advantage for GTB is that these allow it to expand its network without having to build expensive full-service branches. “We’ve always known that you have to bet on alternative delivery channels [in retail banking],” says Segun Agbaje, head of GTB. “Without bricks and mortar, we’ve been able to pile on the retail business and keep costs down.”

He is confident that this platform will allow GTB to have 10 million retail customers within three years.
GTB, already present in countries such as Ghana, Sierra Leone and Gambia, also plans to expand outside west Africa next year. It is due to start operating in Côte d’Ivoire in early 2012 and is considering moving into east Africa through an acquisition.

Mr Agbaje is confident that GTB’s high profitability can be sustained. “What we’ve always had as a strategic intent is to be the most profitable [bank in Nigeria],” he says. “We’ve never chased size. We’ve always believed that if you chase profitability, you’ll have scale.”

Norway

DNB

Profits at DnB Nor (renamed DNB in November 2011) doubled in 2010, with lower costs, improved asset quality and increased market share all contributing to the result. Non-performing loans, already low in 2009 at 1.71%, declined further to 1.55%, while the bank lowered its cost-to-income ratio to 47.6%, from 48.1% the year before.

The cost-cutting programme included centralising business processes, improving procurement and reorganising information technology. The bank also consolidated its Baltic subsidiary DnB Nord, buying out the remaining minority shareholders to achieve 100% control, to further streamline management and costs. And in November 2011, all the financial services group’s operations, including those of DnB

Nor, moved to a single brand, DNB, which will cut branding and marketing costs.

At the same time, the bank repriced its assets to retain interest margins, and gained market share via new offerings that included 24-hour customers services and an upgraded online banking service. The largest cities and suburbs in Norway were the principal focus of the drive to obtain new customers. DNB is also aiming to add to its small and medium-sized enterprise client base in Norway. The bank sees shipping, seafood and energy as areas of particular competitive strength in an international context.

The bank’s healthy balance sheet and Norway’s strong fiscal position allow DNB a competitive funding profile in the European context. The bank increased average maturities on outstanding unsecured and secured debt and has diversified its investor base, for instance through issuing in the US dollar market in various formats. In June 2011, DNB became the first foreign issuer to take advantage of new covered bond legislation in Australia, with a five-year issue for A$600m ($592m).

Oman

BankMuscat

AbdulRazak Ali Issa, chief executive, BankMuscat

AbdulRazak Ali Issa, chief executive, BankMuscat

In spite of the ongoing financial crisis, BankMuscat was successful in not only growing its business on several fronts but also bringing new innovations to the Omani market. The bank’s net profits grew by 38% in 2010 to $263.8m, while its return on average assets went from 1.2% in 2009 to 1.74% in 2010 and its return on average equity rose to 14.6% in 2010 from 10.9% in 2009. Tier 1 capital grew by 12% to reach $1.7bn.

With assets worth more than $15bn accounting for 40% of the country’s banking assets, BankMuscat is the leading financial services provider in Oman. Since its inception in 1982, it has been closely involved in the development of the local economy.

BankMuscat acted as joint bookrunner with US-based Morgan Stanley for Omani telecoms operator Nawras, which listed 40% of its shares in September in an initial pubic offering (IPO) that was fully subscribed and raised $473m. This was a groundbreaking listing as it was the first book-building process ever used in Oman as well as the Gulf’s largest IPO in 2010. The bank also raised the largest fixed-income fund in the country – the $273m Oman Fixed Income Fund.  

On the retail front, BankMuscat already boasts the country’s largest network of 130 branches and 520 ATMs. But in April 2010, the bank opened its first branch in Kuwait, ensuring it now has a presence in all six Gulf Co-operation Council countries through both direct and indirect entities.  

In June 2010, the bank successfully concluded its last and 14th certificate of deposit auction. The issue was subscribed to the extent of OR22.30m ($57.92m) against the size of OR15m. Looking forward, the bank is hoping to enter into the Islamic finance market, after Oman issued a ruling in May 2011 authorising sharia-compliant services.  

“Subject to regulatory approvals, BankMuscat is well positioned to launch Islamic banking services,” says AbdulRazak Ali Issa, chief executive of BankMuscat.

Pakistan

Allied Bank

Zia Ijaz, group chief, Allied Bank commercial and retail banking group

Zia Ijaz, group chief, Allied Bank commercial and retail banking group

Pakistan’s banking industry has had a lot to cope with in recent months, such as floods, energy shortages and high inflation, which have all increased costs for businesses and impaired their repayment capacity.

Zia Ijaz, group chief of Allied Bank’s commercial and retail banking group, says that non-performing loans (NPLs) have been an issue for Pakistan’s banks in the past year. “Fortunately we have been able to manage the risk properly. Our NPL ratio is the lowest compared to our peers,” he says.

Part of the bank’s strategy was in anticipating the difficulties that borrowers would have, and for this reason Allied Bank hired experts with industry knowledge of the sectors to which its borrowers belonged.

Investment in human resources has been a theme at Allied Bank. Mr Ijaz explains that in recent months the bank has focused on human resources quality and has brought in fresh blood. It has employed more than 500 management training officers who were hired from local universities.

Aside from investing in human resources, Allied Bank has also invested in technology. The bank has continued with the roll out of its new core banking solution to 200 branches and has also invested in loan origination software.

Products that have been launched recently include a remittance solution for people who do not have bank accounts so that they can withdraw money using their mobile phone. With much of Pakistan’s population being unbanked, mobile solutions such as these offer great potential for the banking sector.

Paraguay

Sudameris Bank

Despite its export-dependent economy, which has been hostage to foreign exchange and interest rate fluctuations, Paraguay’s economy grew an impressive 15% in 2010. Such expansion has been achieved in some ways due to its active banking market, which extended larger amounts of credit to both businesses and individuals.

Sudameris Bank’s own loan book grew substantially in this time and prudent management and adequate risk analysis kept non-performing loans at very low levels and provisions at exceptionally high values.

“Despite a challenging 2010 in many aspects, Sudameris Bank achieved total assets growth of 17% and net loans growth of more than 41%, while maintaining the highest standard of risk analysis and credit underwriting procedures,” says chairman Conor McEnroy. “Growing market shares in all its operations, a non-performing loan ratio of 0.6% and a return-on-equity ratio of 19% are key measures of these successes.”

Over the past few years, Sudameris has secured a stream of long-term credit facilities and trade programmes with various international agencies – an important achievement in a market where long-term funding is scarce. This has allowed the bank to diversify its financing offering and provide longer-tenure products, ranging from long-term infrastructure financing in the cattle and shipping industries to loans to smaller businesses to mortgages.

Further, in 2010 the bank entered the insurance market by distributing insurance products through its points of sale, both in its retail network and for corporate clients. The new division became profitable after its first year of operations.

Peru

Banco de Credito del Peru

Alvaro Correa, chief financial officer, Banco de Credito del Peru

Alvaro Correa, chief financial officer, Banco de Credito del Peru

Banco de Credito del Peru retained its number one status in Peru and improved across all measures. Net profits grew by almost 20%; return on equity was 26.8%, higher than in 2009; both cost-to-income and non-performing loans ratios were lower than the previous year; assets expanded by almost 30% and Tier 1 capital increased by 7.5%.

Such impressive results were accompanied by a revised growth strategy, which was implemented last year. Chief financial officer Alvaro Correa says: “After the 2008 crisis, which led to a recession in 2009, we [looked at the past] and the future of our business and it became obvious to us that the retail business was going to be the driver of growth for years to come in the Peruvian financial system.”

The bank focused on increasing bank penetration while keeping the cost-to-income ratio under control; pushing a sales-oriented culture internally; and developing more sophisticated risk management tools. Further, access to credit for smaller businesses was made easier thanks to more flexible loan requirements and the acquisition of Financiera Edyficar, the second largest microfinance institution in Peru, which gave BCP access to low-income microentrepreneurs, widening its market penetration.

Specific projects were launched to increase market share in the consumer and credit card segments, to improve the procurement process and keep costs down, and improve efficiency in the small and medium-sized enterprise, foreign trade and consumer loans divisions. All initiatives scored exceptional results, which contributed to the bank’s outstanding performance.

Philippines

BPI

As BPI celebrated its 160th anniversary in 2011, the bank was working toward raising standards with a focus on customer experience and market expansion.

Troubles in the eurozone have caused uncertainty for those in the banking industry in the Philippines and affected BPI’s strategy over the past year. Aurelio Montinola, president and CEO of BPI, says:

“We focused on growing our loan book to improve our loan-to-deposit ratio rather than expanding our asset base.”

In 2010, the bank had a loan growth of 16% to 379bn pesos ($8.76bn). The bank also increased its customer base from 3.8 million to 4.5 million. “We are achieving our target of 5 million customers, and have provided them with additional banking convenience in the form of online investing and loan applications, and real-time cash acceptance machines,” says Mr Montinola.

The bank has a strategy of sustainable growth, using the idea of ‘back to basics’ that is aimed at bringing the customers at the base of the social pyramid into the banking sector and working toward financial inclusion.

For the year ahead, Mr Montinola says: “We will focus on cost efficiency, capital efficiency and differentiating ourselves primarily through relationship managers providing appropriate financial solutions to our key clients, and superior online and mobile banking solutions for everyone else.”

Poland

PKO Bank Polski

Zbigniew Jagiello, chief executive, PKO Bank Polski

Zbigniew Jagiello, chief executive, PKO Bank Polski

At a time when the numerous foreign-owned banks in Poland’s banking sector have been held back by eurozone parent woes, PKO Bank Polski’s local ownership allowed the country’s largest bank to continue growing. Profits were up 40% in 2010, to more than 3.2bn zlotys ($976m), and the bank recorded its first ever quarterly net profit of more than 1bn zloty in the third quarter of 2011.

“The secret of the bank’s success is stable business development and balanced growth across our retail, small business and corporate banking operations,” says chief executive Zbigniew Jagiello.

The bank’s perceived strength and healthy liquidity position have allowed it to maintain access to the Eurobond market. After a debut issue in euros in September 2010 that priced inside any previous non-sovereign Polish Eurobond, the bank followed up with a Swiss franc issue in June 2011.

Poland would not be immune from outright recession in the EU or continued heavy disruption to wholesale funding markets, but Mr Jagiello believes the comparatively low banking penetration still offers a structural opportunity for PKO. And the bank’s cost control has helped to protect it against any downturn, with the cost-to-income ratio falling from 47.9% in 2009 to 39.5% in the third quarter of 2011.

The bank has also rolled out new products and services across a large customer base with surprising speed. Over the past eight months, more than half a million of its clients opened upgraded current accounts with new benefits, while contactless cards were issued to more than 3 million users between September 2010 and the end of July 2011.

“Our volume of cards with a microchip and near-field communication functionality is now one of the largest in Europe, so we are proud to be a leading innovator not just in Poland, but also in the EU,” says Mr Jagiello.

Portugal

Banco Santander Totta

Nuno Amado, CEO, Banco Santander Totta

Nuno Amado, CEO, Banco Santander Totta

A bailed-out country undergoing a fiscal squeeze is not the ideal operating environment for banking. Against this backdrop, Banco Santander Totta has managed to maintain a solid performance and in 2010 (before the bail out) it achieved a return on equity of 15.3%, a cost-to-income ratio of 45.7% and – most impressive of all – a non-performing loan ratio of just 1.4%.

At the same time as delivering on the numbers, the bank has taken key initiatives such as launching its Customer Experience Project to identify negative opinions among its clientele, and it has continued to advance its SME lending with an increase in lending to this sector of E184m. The bank also maintained credit lines under its dedicated PME Investe programme.

Banco Santander Totta CEO Nuno Amado says: “[Last year] and the first half of 2011 were very difficult and complex, given Portugal’s weak economic growth and the known difficulties regarding liquidity and funding, arising basically from the ‘sovereign debt crisis’ that affected Portugal. The credit portfolio quality, despite the deterioration of the economic situation, remained controlled, with NPL levels being half of those registered in the banking system. And the funding position improved due to the deleveraging process that was done together with an important increase in customer deposits.”

Capital was also strong, with Tier 1 and core Tier 1 ratios standing at 11.2% and 10.3%, respectively. This takes the bank above the Bank of Portugal’s target of 10% by 2012.

Puerto Rico

Popular

Richard Carrión, chief executive, Popular

Richard Carrión, chief executive, Popular

Popular had quite a year in 2010. In the space of four months, the bank raised $1.5bn – when it initially was seeking only $900m – sold a subsidiary for $600m – above the original asking price of $500m – and successfully bid for $2.5bn of deposits and $9.1bn of assets from lender Westernbank Puerto Rico, which was one of the largest failures in the US financial system last year. The assets were absorbed and transferred into the bank’s own systems in just over three months.

Execution was key and credit has to go to Popular for closing these deals successfully; and closing 2010 in profit too, after the previous year’s losses.

But the best is yet to come, says chief executive Richard Carrión. While last year the group’s profit was explained simply by the sale of its technology and processing subsidiary, Evertec, this year the bank has closed three quarters in operational profit – a confirmation that its strategy is working.

It seems that Popular will have a busy 2012 too. “[We plan to] finish off [work on] any remaining legacy assets, focusing on growing portfolios – hopefully the economy will be a little less hostile than it has been, particularly in Puerto Rico. [We will] continue to work on US operations, and look at further efficiencies in Puerto Rico’s operations,” says Mr Carrión.

“We have a very good infrastructure in Puerto Rico to which we can add additional assets. We have the infrastructure to manage a lot more assets than we have now, so we’re looking for additional purchases.”

Qatar

Qatar National Bank

Ali Shareef Al-Emadi, group chief executive, Qatar National Bank

Ali Shareef Al-Emadi, group chief executive, Qatar National Bank

In 2010, Qatar National Bank (QNB) continued its stellar performance, recording a 25% rise in assets to QR223.4bn ($61.4bn) and a 36% increase in profits to QR5.7bn. This exceptional growth delivered an average return on equity of 28.8% for 2010, up from 25.4% in 2009.

Meanwhile, QNB’s loan portfolio increased by 21.1% to QR131.7bn and the bank continued to maintain its high asset quality, with a non-performing loan ratio of just 0.9% at year-end 2010.  

“Among the key achievements in 2010 was the November launch of the bank’s inaugural $1.5bn bond offering, issued with a five-year tenor. The bond was the largest issue of its kind in emerging markets with a very competitive coupon of 3.125%,” says Ali Shareef Al-Emadi, QNB’s group chief executive.

“Another key event in 2010 was the successful rights issue in the second quarter of the year, which increased the bank’s share capital by 25%.”

While maintaining its leading domestic position, QNB has continued to expand its network in a number of countries in the Middle East and north Africa region. Over the past few years, QNB has acquired a 50% stake in Tunisian Qatari Bank, a 34.3% stake in Jordan’s Housing Bank for Trade and Finance, and a 23.8% stake in the United Arab Emirates’ Commercial Bank International.  

In May 2010, it secured approval from the Syrian central bank to raise its stake in its Damascus-based subsidiary QNB-Syria, from 49% to 55%, with plans to increase its capital to $300m.

It has also grown its presence in south Asia by acquiring a controlling stake of 69.59% in Indonesia’s Bank Kesawan through a rights issue. QNB was named as the standby buyer in late 2010 and bought all of the shares offered in the issue in January 2011. Bank Kesawan has a market capitalisation of $55m and operates 33 branches throughout Indonesia.

Republic of Congo

Ecobank Congo

Lazare Noulekou, managing director, Ecobank Congo

Lazare Noulekou, managing director, Ecobank Congo

Ecobank Congo has been the fastest growing of its peers in the Republic of Congo over the past two years. It now ranks fifth in the country by loans and deposits.

Lazare Noulekou, the bank’s managing director, says it aims to move up one spot to fourth place in 2012. He says the target is for Ecobank’s market share for loans and deposits to rise from about 8% today to 12% next year.

Ecobank’s assets grew by 31% in 2010 to $161m. Its Tier 1 capital rose at an even faster rate, by 72% to $10.5m. The bank also recovered from the Republic of Congo’s downturn in 2008. It made net profits of $2.8m, compared with one of $1m a year earlier and a loss of $2.7m in 2008.

Ecobank has managed, moreover, to make itself far more productive. Its cost-to-income ratio fell from 84% in 2009 to 65% in 2010.

The government in the Republic of Congo is trying to develop its non-oil sector to help reduce unemployment. Manufacturing industries are seen as key to achieving this. Ecobank has been at the forefront of Congolese banks’ efforts to boost manufacturing and sectors such as telecoms. It was the first lender in the country to launch a programme dedicated to supporting the value chain of blue-chip companies. As such, it started targeting financing for brewery industry distributors – many of which are entrepreneurs or small companies – and contractors and distributors for other major companies.

Romania

BRD-Société Générale

Guy Poupet, chief executive, BRD-SG

Guy Poupet, chief executive, BRD-SG

Government austerity measures meant Romania was still in recession in 2010, but BRD-Société Générale did not sit idle, even while lending opportunities were scarce. The bank cut operating expenses by 5% in 2010, reducing the cost-to-income ratio by two percentage points, to 42%.

It has also taken big strides in rolling out new technologies, in particular contactless payment cards that operate in about 1000 retail outlets, the gates of metro stations, and since April 2011 at the turnstiles of a customer’s chosen football club. The metro payment system is unique in Europe, and banks elsewhere are interested in adopting it.

“Through a very strong, innovative effort, we managed to launch and sell new products on the Romanian market. The contactless solution adapted to public transportation is a very important step forward which encourages the use of non-cash transactions in everyday life,” says BRD-SG’s chief executive, Guy Poupet.

While non-performing loans are rising, BRD-SG has sought to maintain support for the small business sector, extending 900m lei ($278m) in new loans to this segment, of which 15% were guaranteed by the EU-supported Rural Credit Guarantee Fund. On the retail side, the cards business remains a focus for fee generation, with the ‘á la carte’ multi-function card product attracting 230,000 applicants to date.

“The main priorities are, on the one hand to keep a steady control on risk, and on the other hand to exploit all the opportunities generated by the implementation in our offer of innovative technologic solutions. I think that innovation can now definitely make the difference in the market,” says Mr Poupet.

Russia

Nomos Bank

The longer the market for initial public offerings (IPOs) remains shut, the more astute the timing of Nomos Bank’s 24.99% IPO in April 2011 appears. It is easy to forget that this IPO took place when uncertainty over Japan’s Fukushima nuclear plant was gripping markets. Despite that, the $800m on offer generated orders for $3.2bn, including 40 orders of more than $30m, and just two Russians among the top 20 investors.

“The order book was a who’s who of predominantly long-only international emerging market investment funds. The stability of our existing shareholders and the bank’s good track record were vital in attracting the new investors – to be lucky, you need to be hard-working,” says Jean-Pascal Duvieusart, the board member responsible for Nomos Bank’s strategy.

The two strategic shareholders, Russian company ICT and PPF group of the Czech Republic, both retained their position in the bank through the IPO, reassuring other investors that they are there for the long haul. And the money raised can go directly to maintaining the bank’s impressive growth rates.

The bank’s organic growth in 2010 was 34.8%, and total growth was 91.3% thanks to the acquisition of Bank of Khanty-Mansiysk (BKM), one of Russia’s largest regional banks based in the resource-rich Tyumen oblast. BKM specialised in small and mid-sized business lending, plus retail banking.

“BKM had the right mix for us, we knew how to manage its existing business, and with a stronger focus on retail banking relative to Nomos, it also brought us a better funding mix,” says Mr Duvieusart.

The bank’s deposit base is now balanced evenly between retail and corporate customers. While corporate lending still accounts for 71.6% of its portfolio, the retail and small business lines have gained a 2% share of its total lending over the past six months alone. And growth has been achieved without sacrificing asset quality – at 2.2% in June 2011, non-performing loans are well below the Russian average.

Rwanda

Bank of Kigali

In August, Bank of Kigali became only the second locally based company to complete an initial public offering (IPO) on the Rwanda Stock Exchange. The state-controlled bank raised about $30m, which boosted its already high capital adequacy ratio from 20% to 27%. It will also help Bank of Kigali, which like other Rwandan lenders is largely funded by short-term deposits, finance long-term projects in the country. “The IPO was a major achievement,” says James Gatera, the bank’s managing director.

Bank of Kigali has helped ease the mismatch between its short-term funding base and rising demand for medium- and long-term debt in other ways, too. Early this year it negotiated a $20m credit line with the French Development Agency, which will be used to fund small Rwandan businesses.

Bank of Kigali’s main push, however, has been in the field of retail banking. Only about one-fifth of Rwanda’s 10 million people are thought to be banked and the lender has been growing its network of branches to tap into this opportunity. “We’ve been expanding in a big way,” says Mr Gatera. “What we’ve done is show a seriousness about banking the unbanked, reaching the lower end of the pyramid and providing [it] access to finance. There are still huge opportunities for banks to tap into this untapped potential. This is what Bank of Kigali is doing.”

The lender has been highly profitable in recent years, thanks to this growth and Rwanda’s strong macroeconomic position (real gross domestic product is forecast to grow 6.5% this year, while inflation is a low 5%). Its net profits grew 17% in 2010 to RwFr6.2bn ($10.6m), a return on equity of 25%.

Non-performing loans climbed from 6.7% to 9% during the year. But Mr Gatera says they now stand at 7%, having fallen thanks to better risk management and the introduction of a credit bureau in the country.

Saudi Arabia

Samba Financial Group

Throughout the global financial crisis, Samba Financial Group has continued to deliver cutting-edge products and services, leading to both highly satisfied customers and positive bottom line performance.  
Its Tier 1 capital increased by 13.8% in 2010 to help it weather the strain of deteriorating economic conditions, and at the end of 2010 its non-performing loan ratio was healthier than that of many of its peers at 3.7%.

Samba has demonstrated innovation in key areas such as mortgage lending, where it has developed a ‘segment-based approach’ to provide an alternative to the ‘one-size fits all’ strategy. Furthermore, Samba’s focus has been on fixed-rate pricing, which has helped build consumer confidence by ensuring a certain level of predictability, which is not available on most products as they use floating rates.  

One of the most significant initiatives undertaken by Samba in 2010 was its implementation of the Umrah visa fee payment process for Saudi Arabia’s Ministry of Hajj and Umrah. Samba won the mandate to implement a customised solution to process payments for an estimated 4 million Umrah pilgrims.  

It is this unique combination of significant market share and relentless innovation in customising client solutions that has made Samba the partner of choice for many of Saudi Arabia’s leading corporations. During the past year, Samba has also firmly positioned Sambacapital, the investment arm of the bank, as a regional player by growing its market share across the Gulf Co-operation Council (GCC) countries through capitalising on its presence in the United Arab Emirates and Qatar.

“While the capital markets industry faced strong headwinds in the GCC [countries] during the past three years and some market participants scaled back, Sambacapital invested in people and systems and launched new innovative products which resulted in better customer service and improvement in our market positioning” says Eisa Al-Eisa, chairman of Samba.

“Saudi Arabia today is well and truly on a sustainable development path, specifically in the area of infrastructure upgrade – roads, rail network, aviation, education, hospitals and housing. We are ready to capitalise on this immense opportunity and to play a meaningful role towards nation building.”

Senegal

Ecobank Senegal

Senegal’s middle class is growing quickly. But tapping into it has not always proved easy for the country’s banks.

Ecobank Senegal has made a big push into this area in 2011, spending much of its time offering its services to a group likely to be a mainstay of the middle class for decades to come: university students.

Between March and June it brought 59,000 of them into the banking sector by getting the government to route their scholarships through its branches. “We opened an account for each student and distributed ATM cards to them,” says Yves Coffi Quam-Dessou, managing director of the bank. “This is the first time in the [west African] sub-region, I believe, that this size of banking of students has been achieved. It’s been an adventure for us.”

Ecobank does not yet provide credit to Senegalese students, but plans to do so in future and also offer them other products.

The bank’s focus on students demonstrates its ambitions in Senegal, where it began operations 12 years ago and now ranks third among the country’s 19 lenders by assets and deposits.

Next year Ecobank will continue to grow its network of 35 branches, 20 of which are in the capital, Dakar.

Expansion of its branches and deposits has led Ecobank’s assets to grow quickly in the past 10 years. They rose 20% to CFA Fr314bn ($643m) in 2010. Net profits dipped 2% to CFA Fr5bn as Senegal continued to suffer from the global economic downturn of 2009, but return on equity rose from 27% to 32%.

Despite its high profitability, Ecobank wants to cut its overheads further. It plans to reduce its cost-to-income ratio from 63%, at which it stood in 2010, to 52%.

In the long-term, Mr Coffi says Ecobank will have to target rural areas and agricultural lending, both of which are increasingly important sources of growth for Senegalese banks.

Serbia

Banca Intesa Beograd

Draginja Djuric, chief executive, Banca Intesa Beograd

Draginja Djuric, chief executive, Banca Intesa Beograd

Banca Intesa Beograd has established an enviable track record of success in the Serbian market, comfortably winning this award for the fourth year running. The bank’s results remain strong, with profits up almost 27% in 2010 and return on equity at 14% – significantly higher than major competitors.

“Operating in a very complex macroeconomic landscape, Banca Intesa was faced with the challenge of preserving stable foundations for further growth through strengthening its deposit base and maintaining a strong capital position with high liquidity. In the conditions of moderate economic recovery, we were seeking new growth areas in order to diversify revenue streams and looking to maintain dynamic lending activity, while preserving credit portfolio quality,” says chief executive Draginja Djuric.

These opportunities include lending E920m to small and medium-sized enterprises in 2010, and signing a credit line from the European Fund for South-Eastern Europe for low-cost onlending. Meanwhile, a cost-to-income ratio that is about 10 percentage points lower than competitors is also valuable at a time of subdued economic growth. Despite Serbia’s highly competitive market of 33 banks, Banca

Intesa retains a leadership position across assets, customer loans and deposits, as well as holding a 15% share of net profits for the whole sector.

“It is not realistic to believe that the Serbian market will remain immune to the effects of the expected further deepening of the eurozone crisis, which is why we anticipate that the local business climate will face additional challenges. That said, our focus will be to remain the major partner of the Serbian corporate sector and an important pillar of domestic economic growth by maintaining strong financing for export-oriented production, infrastructure development projects and agriculture, while at the same time pressing ahead with further penetration of retail banking segments,” says Ms Djuric.

Sierra Leone

International Commercial Bank

Viswanathan Sundaram, chief executive, International Commercial Bank

Viswanathan Sundaram, chief executive, International Commercial Bank

Sierra Leone’s banking system is intensely competitive. Despite a population of just 5.8 million and an economy measuring $2.2bn, there are 13 commercial lenders in the country. This, along with weak economic conditions, meant only six of them made a profit in 2010.

“It was a case of too many banks chasing too few high-net-worth customers,” says Viswanathan Sundaram, chief executive of International Commercial Bank (ICB), winner of this year’s award.

ICB was one of the few banks that managed to come through 2010 strongly, increasing its profits by 174% to 1.1bn leone ($242,000). “Tripling the net profit to enhance shareholder returns, despite the tough market conditions, was the main success achieved by us in the past year,” says Mr Sundaram.

The bank also managed to fix its balance sheet, slashing its non-performing loans ratio from 9.7% to 2.4%, one of the lowest in the industry.

Its profitability was still low, however, with its return on equity being just 5.4%.

But ICB is confident this will grow as Sierra Leone’s economy recovers. The signs so far are good. The bank’s net profits rose 117% in the first six months of 2011, while return on equity improved to 11.3%.

ICB has done much to make itself more competitive in the past 12 months. Among its initiatives, it established a team of relationship managers to serve as one-stop contacts for all a client’s needs. It also decided to send its staff directly to the offices of its biggest corporate customers, allowing them to carry out their cash and cheque-related needs without having to go into a branch. And in a market in which current accounts often pay no interest, ICB made sure that its accounts carried on doing so.

The result was that the bank significantly increased its deposit base and number of customers.

Singapore

DBS

Piyush Gupta, CEO, DBS Group

Piyush Gupta, CEO, DBS Group

Although DBS has the largest branch and ATM network in Singapore, its story is not just confined to its home market. And with the small city state’s economy being so open and international, it is no wonder that DBS’s ambitions are not confined to its domestic market.

“Our ambition for the next five to 10 years is clearly [focused] on Asia,” says Piyush Gupta, CEO of DBS Group.

The bank’s plan is to become the ‘Asian Bank of choice for the new Asia’. These plans go beyond south-east Asia and into China. And with China’s currency rising, DBS has had a role to play in the offshore renminbi business. In the space of five months, it was able to garner Rmb19.8bn ($3.11bn) of offshore renminbi deposits in Singapore. The bank has also been one of the first banks involved in the renminbi trade settlement programme in Singapore and Hong Kong, and at the end of December 2010 had booked $1.3bn of renminbi-related trade assets.

The bank is also focused on expanding into the high-return businesses of wealth management, small and medium-sized enterprises (SMEs) and global transaction services.

With a strong balance sheet, DBS is well placed to expand on its SME business. In 2010, the bank was able to grow its SME assets by 11% in Singapore. “We are well capitalised and are not shy of using the balance sheet,” says Mr Gupta, adding that he sees the SME segment as one of the bank’s particular strengths.

Slovakia

Postova Banka

Marek Tarda, chief executive, Postova Banka

Marek Tarda, chief executive, Postova Banka

The growth strategy of private equity fund Istrokapital at Postova Banka continues to yield impressive results, with the bank’s profits up almost 150% in 2010 to a record level, and return on equity more than doubling to 27.8%. The bank remains focused on its partnership with the Slovak postal service, opening 67 new branches in post offices during 2010, as well as three new standalone branches.

The bank’s unlimited term deposit, which combines a high interest rate with a no-penalty withdrawal policy, continues to drive deposit funding to the bank at a time when wholesale financing is scarce.

Postova Banka’s share of total system deposits rose to 8.5% in 2010, from 6.7% in 2009. The latest offering of this product drew in 26,000 new savers in just three months.

“We will continue to meet our goal to be a practical bank, which provides simple and fair products that every client can understand. Our main goal is to [be one] of the strongest banks in Slovakia and to retain dynamic growth in the field of retail banking. We want to bring innovations which, in terms of competitiveness but also from the perspective of the client, are unique and our own, and thanks to which we become an everyday partner for the general mass of clients,” says Postova Banka’s chief executive Marek Tarda.

Having raised plentiful funding, the bank has now moved to focus on lending opportunities, once again introducing a product that was at that time unique on the Slovak market. This is the ‘better instalment’ credit consolidation loan that allows customers to transfer and consolidate loans owed to other banks in order to bring down their overall interest payments. This helped to drive a 38.4% rise in total customer loans, and a 24% climb in assets.

Slovenia

SKB Banka

Thanks to early euro membership in 2007, Slovenia’s banks enjoyed plentiful funding during the boom years, and some of the largest over-reached themselves. As these banks struggle with high non-performing loans (NPLs), the country’s fifth-largest player, SKB Banka, has seen opportunities open up. Its NPL ratio fell in 2010, to just 3.9%, while its larger rivals are struggling with bad loans in double figures.

“Beside effective commercial activities and improved productivity, our risk policy and the constant concern for the optimisation and reasonable limitation of operating costs resulted in a 17.7% improvement in profits in 2010. This result was achieved in a difficult economic environment and further reinforces our core Tier 1 capital ratio,” says SKB’s chief executive Gerald Lacaze.

The bank is not immune from eurozone woes – its majority shareholder is France’s Société Générale. But it has established a strong enough standalone position in the Slovenian market to weather the storm. A new system for assessing the sensitivity of net banking income to interest rate changes has helped SKB achieve the second highest net interest margin in the Slovene banking sector, while deposits are up 30%. A centralisation of IT functions has cut both capital and running costs for the back office.

The bank is also active in planning its product offering to attract fresh business, with loans up 45% in 2010. It offers fully personalised credit cards, a special product package for start-up companies and specific segmented offerings for professionals in sectors such as law and medicine.

“SKB has kept its focus on permanently adapting its universal banking business model to the local economy, in a turbulent market. To succeed in this strategy, we take proactive and efficient commercial actions to create innovative, qualitative and price-competitive banking services tailor-made to the needs of clients,” says Mr Lacaze.

South Africa

Nedbank

Mike Brown, chief executive, Nedbank

Mike Brown, chief executive, Nedbank

South Africa’s economy has not fully recovered from its downturn in 2009. And, given the country’s growth historically has a close correlation with that of Europe, another slowdown seems highly likely.

With demand for credit likely to be sluggish for a while as a result, South Africa’s banks are increasingly focusing on ways to generate fee-based revenues. Nedbank, the winner of this year’s award, has been among the most successful of them in this endeavour so far — its non-interest revenues grew 16% in the year to the end of June.

Efforts to boost these will be among its priorities in 2012. “We’re not expecting strong asset growth in the short term,” says Mike Brown, Nedbank’s chief executive. “So we’ll continue to focus on opportunities for generating transaction and non-interest revenues.”

Among Nedbank’s most important recent moves was to introduce M-Pesa — the mobile phone-based money transfer service so successful in Kenya — to South Africa. Having launched it in late 2010, about half a million people have already registered.

M-Pesa has proved popular among unbanked South Africans. But it has also caught on with small businesses, particularly those wanting to make payments to non-payroll employees. “We believed it had enormous potential in South Africa,” says Mr Brown. “Initially, we felt it would play out well in the unbanked market, which it has. But it is also increasingly being used in the banked market among small businesses.”

Another of Nedbank’s aims is to deepen its ties with the rest of Africa. It has operations in five southern African countries and has an alliance with Ecobank, the biggest lender on the continent by geographical sprawl.

It is also open to acquisitions elsewhere, although it remains cautious in its approach. “We have looked at a number of acquisition opportunities,” says Mr Brown. “But none of them have ticked the financial, strategic and cultural boxes.”

South Korea

Woori Bank

Lee Soon-woo, CEO, Woori Bank

Lee Soon-woo, CEO, Woori Bank

As a leading bank in South Korea’s export economy, Woori Bank has been at the front end of the troubles that are facing the country as a result of the global financial crisis.

“Woori Bank, traditionally being one of the country’s largest lenders to the corporate sector, inevitably experienced greater negative effect of liquidity crunch than major competing banks,” says Lee Soon-woo, CEO of Woori Bank. And because of the impact on the financial health of corporate borrowers, Woori Bank had to set aside more provisions for bad loans than it had in previous years.

“Nevertheless, we have accelerated bad loan settlement by selling and writing-off non-performing loans [NPLs], collecting delinquent loans and disposing of collateral thereby significantly reduced the NPL ratio by 0.92% to 2.42%,” says Mr Lee.

On a more positive note, the bank has in the past year been focusing on customer satisfaction and has appointed an executive to the role of chief customer officer, a first in South Korean banking.

The bank also aims to put the customer at the centre of what it does when it comes to product design. Mr Lee cites the “111 Time Deposit” as an example of a customer-oriented product that the bank has recently introduced, which has a longer maturity of 18 months than the conventional 12-month maturity.

And in keeping up with the pace of smartphone usage in South Korea, Woori Bank launched a product exclusively for sale via smart phones. Woori Bank has also developed a universal mobile banking service that has raised deposits worth Won105bn ($91.8m).

Spain

Santander

Steering a course through the minefield of the current Spanish economy is testing the resolve of all the country’s banks. Many of the saving banks (cajas) have not been up to the challenge and have been the subject of a radical restructuring.

Santander, by contrast, can boast that its net profits for 2010 only fell by 8.5% compared to the average sector drop of 27.4%, that it kept its record for efficiency with a cost-to-income ratio of 43.3%, and at 3.55% its non-performing loan (NPL) ratio was below the sector average of 5.83%.

CEO Alfredo Sáenz says: “Spain presented many challenges to banks in 2011, including careful management of pricing and margins, of NPLs and of the balance sheet, against a backdrop of macroeconomic and market uncertainty. Around halfway through the year, medium- and long-term wholesale funding markets closed, presenting another challenge. Generating profit, while strengthening the balance sheet, was difficult in this environment.”

One key initiative taken by the bank was to help ease payment difficulties for Spanish families struggling with their mortgages. In July it announced that customers facing difficulties through unemployment and a 25% decline in income could have a moratoria of up to three years on mortgage capital repayments. Loan extensions were also offered, enabling families to maintain their good credit records.

The bank has emerged victorious in the deposit war by offering customers up to 4%, enabling it to increase deposits by 21%. Looking to the future, Mr Sáenz says: “In Spain, we will work to recover profit we have lost in the past few years. The task is to prepare for an improvement in the credit cycle, to actively manage margins, adapt the cost structure to market realities, and gain profitable market share.”

Sri Lanka

Commercial Bank of Ceylon

Amitha Gooneratne, managing director and CEO, Commercial Bank of Ceylon

Amitha Gooneratne, managing director and CEO, Commercial Bank of Ceylon

Commercial Bank of Ceylon, which has the highest market capitalisation in Sri Lanka’s financial sector, has been able to maintain its position as a benchmark public bank in the country. The bank’s net profit increased by 28.3% to SLRs5.52bn ($50m) in 2010, from SLRs4.3bn in 2009. Its assets also grew, increasing 14.81% from SLRs322.31bn in 2009 to SLRs370.06bn in 2010.  

Like many markets around the world, Sri Lanka has been affected by the economic turbulence resulting from various global events of recent years, and Amitha Gooneratne, managing director and CEO of Commercial Bank of Ceylon, says that the export markets in Sri Lanka were affected by the unrest in the Middle East.

Commenting on the other challenges over the past year, Mr Gooneratne says: “Maintaining a low non-performing loan [NPL] ratio with better provision cover and improving cost income ratios, while [also] increasing asset volumes to maintain acceptable levels of gross and net income, required a delicate balancing act.”

The bank reduced its NPL ratio from 6.84% in 2009 to 4.22% in 2010.

Mr Gooneratne says that his ambition is to expand Commercial Bank of Ceylon’s presence in the northern and eastern regions of Sri Lanka, as well as in Bangladesh. The bank has been aggressive in its domestic expansion, targeting the opening of new branches in the once war-affected areas in the north and east of the country.

As well as regional expansion, the bank is looking to focus on products, with the expansion of inward remittances, bancassurance and the introduction of more fee-based services.

Swaziland

First National Bank of Swaziland

David Wright, chief executive, First National Bank of Swaziland

David Wright, chief executive, First National Bank of Swaziland

Swaziland’s economy has struggled in the past three years as weak external demand has hit its exports, particularly textiles and wood pulp. Gross domestic product grew just 1.2% in real terms in 2009 and 2.1% in 2010, far below the levels in most other sub-Saharan African countries.

This, coupled with a competitive and fairly mature corporate market, has made life difficult for Swaziland’s banks.

But FNB Swaziland has managed to maintain high profitability by winning more market share in corporate banking and expanding its retail banking business, which has led to an increase in non-interest revenues.

FNB’s profits rose 16% in 2010 to 73m emalangeni ($9m), representing a hefty return on equity of 24% and making it the country’s most profitable bank.

FNB has taken plenty of innovative measures in the past 12 months. It became the first lender in Swaziland to offer mobile banking, allowing customers to transfer funds, check balances and buy airtime for their phones. It also introduced eWallet, a product enabling clients to send money via a mobile phone to people without bank accounts (who can collect the cash at FNB’s ATMs).

For corporate customers, FNB launched Swaziland’s first electronic cash management service.

“Introducing innovative electronic banking channels has enabled us to seize growth opportunities,” says David Wright, FNB’s chief executive. He adds that such measures should continue to serve the bank well next year — when the economy is likely to remain fragile — and will be crucial to it expanding its fee-based income.

Sweden

SEB

Annika Falkengren, group chief executive, SEB

Annika Falkengren, group chief executive, SEB

Outside the eurozone and with a home government that has a strong fiscal framework, Swedish banks have acquired a safe haven reputation over the past 18 months, and SEB’s reputation looks richly deserved. The bank’s profits rebounded by 630% in 2010, allowing a 50% increase in the dividend paid to shareholders. The reversal of credit loss provisioning was one of the main drivers of this recovery, and non-performing loans in Sweden are less than 2%.

“We have continued to serve our customers well, grown together with them and improved customer loyalty. Despite a highly uncertain market environment, our results are stable and we have managed to balance cost development with prioritised investments. SEB has continued to increase its balance sheet strength in order to support our customers, and has passed all regulatory hurdles and stress-tests with flying colours,” says SEB group chief executive Annika Falkengren.

SEB has been particularly active in developing its treasury and cash management services, becoming the first Nordic bank to offer settlement in offshore Chinese renminbi, and rolling out a cash-flow hedging tool to allow clients to manage all their foreign exchange exposure in real time through one web-based solution. The bank has a 70% share in Nordic supply chain finance markets, and its transaction services online community ‘the Benche’ has 20,000 visitors per month from more than 100 countries.

“Going forward, our large corporate expansion in the Nordics and Germany is of particular importance to us. We will further develop our comprehensive range of financial services and grow together with our customers,” says Ms Falkengren.

Switzerland

Credit Suisse

Hans-Ulrich Meister, chief executive, Credit Suisse Switzerland

Hans-Ulrich Meister, chief executive, Credit Suisse Switzerland

Volatile markets continue to affect the world’s largest investment banks, and a strong franc has also challenged Swiss exporters. But Credit Suisse has done more than most to establish some stable revenue streams, and ensure a resilient capital base.

In early 2011, the bank sold a contingent convertible bond for SFr6bn ($6.52bn) to existing shareholders, together with a $2bn public placement of Tier 2 buffer capital notes. Both issues had high conversion triggers, and provided the bank with a well-priced 70% of the contingent capital that it needed to raise over nine years in one week.

Hans-Ulrich Meister, chief executive of Credit Suisse Switzerland, believes that the bank can take advantage of its position as an early adopter of new regulations, while maintaining a long-term perspective to identify new trends and opportunities for its clients.

“The key to our success was our integrated strategy, which allows us to serve clients holistically, and our global presence, coupled with our conservative funding position and strong capitalisation,” says Mr Meister.

In the vital private banking sphere, strong cost control allowed Credit Suisse to maintain a 29.5% margin in 2010, the highest in the industry, while the SFr150bn in net new wealth management assets added since 2008 are three times greater than the nearest competitor. The bank is particularly successful in cross-selling between its private banking division and its investment bank and asset management activities, with private banking involved in 90% of the SFr4.4bn of collaborative revenues raised in 2010.

“We were able to concentrate on our clients in this challenging period, offering our combined expertise across private banking, corporate banking, investment banking and asset management. Our Swiss home market remains of central importance to Credit Suisse, accounting for more than one-third of the bank’s earnings,” says Mr Meister.

Taiwan

Chinatrust Commercial Bank

Frank Shih, chief strategy officer, Chinatrust

Frank Shih, chief strategy officer, Chinatrust

Given the over-saturated nature of the Taiwanese banking market, Chinatrust has ambitions to go beyond Taiwan, to be a premier bank in Asia.

Frank Shih, Chinatrust’s chief strategy officer, says of the bank’s ambitions: “Our objective is to become one of the major Asia leaders in the coming decade.” He adds that to be able to do this, the bank first needs to be able to defend its position in Taiwan, maintain profitability in order to retain strength and support from the shareholders for new investments, and expand into high-growth markets in the region.

To facilitate its overseas plans, Chinatrust has converted the IT systems of all its overseas branches onto a common IT platform, which will make it easier to integrate and standardise the products and services across the regions where the bank operates. The bank also faces challenges in its overseas expansion because of uncertainty in the global economy and because of the tightening regulatory environment in markets around the world.

Chinatrust faces pressure in Taiwan because the market is overbanked, with a relatively large number of banks chasing a small number of customers. This makes it difficult for the bank to differentiate itself when so much of the competition is price based. Despite these difficulties, Chinatrust has been able to maintain a strong position compared to its peers, particularly in the areas of cash management, foreign exchange derivatives, wealth management and trade finance.

Mr Shih says that the bank’s objectives for the next year include exploring new high-growth segments in the region such as small and medium-sized enterprises and private banking, as well as tightening cost control and risk management in the face of uncertainty in the global economy.

Tanzania

Standard Chartered Tanzania

Tanzania’s banks have suffered from rising costs in the past two years. Many expanded quickly in the run up to an economic slowdown in 2009, often building expensive branch networks in the process.

Cost-to-income ratios in the country are thought to have risen by about 20% across the sector this year, thanks to revenues and demand for credit not having picked up as much as lenders wanted.

Standard Chartered Tanzania has kept a tight rein on its cost base, however. Its cost-to-income ratio rose only a few percentage points in 2010 to a still fairly low 64%. And it remained highly profitable, its net earnings of $13.9m amounting to a return on equity of 21%.

Standard Chartered has, moreover, still managed to increase its loan portfolio recently. This has grown by about 25% in the year to date (or substantially more if offshore loans to Tanzanian borrowers are included). “We’ve focused on growing our loans and advances,” says Jeremy Awori, the bank’s chief executive.

Standard Chartered has been able to increase its market share of corporate loans partly because the size of its parent’s balance sheet gives it the clout when it comes to lending that few other banks in the country can match. But it has also innovated and introduced new products. Among those this year, it launched renminbi accounts. “We were the first bank to launch renminbi accounts in Tanzania,” says Mr Awori. “That supports the Sino-Tanzania trade corridor.”

These have proved popular with Chinese companies wanting to invest in Tanzania, and local ones wanting to export to and import from China. Before, traders wanting renminbi had to first swap Tanzanian shillings into dollars before buying the Chinese currency.

For retail clients, Standard Chartered rolled out Visa debit cards for its higher-net-worth account holders, becoming the first bank in the country to do so. It also launched an online tax payment service.

Thailand

Bangkok Bank

Bangkok Bank aims to be a leader in a number of areas of the Thai banking industry, including the market for deposits. In an environment where a number of entrants are aggressively competing for deposits, Bangkok Bank has been able to maintain its strong position by finding a mix of new products and leveraging its existing relationships with its personal, business and corporate customers.

Aside from attracting more deposits, Bangkok Bank has expanded its network, increasing the number of accounts to 18 million. Like many in the region, the bank is looking beyond its domestic borders, as it follows its corporate customers, many of which are expanding into Asia.

Bangkok Bank’s international network includes 24 overseas branches, and its Malaysian subsidiary opened three new branches in 2010 and one new branch in 2011.

“Our international branch network notably helped us support large Thai corporates expanding offshore and we also financed several major acquisitions in Australia, Europe and Asia in sectors such as energy, seafood and retail,” says Chartsiri Sophonpanich, president of Bangkok Bank.

This helped Bangkok Bank’s overall performance in the past year, with the bank’s net profit increasing by 19.9% to Bt24,808bn ($800m) in 2010.

However, the prospects for growth in 2012 have been dimmed by the recent floods in Thailand. “We will continue to stand by our customers and the communities affected by the flooding, and share in the national reconstruction effort. We will help our customers steadily build their competitiveness to prepare for regional economic integration, and we will strengthen our consumer banking operations to better meet demographic trends,” says Mr Sophonpanich.

Togo

Ecobank Togo

Ecobank Togo has traversed Togo’s economic downturn over the past three years well. The bank made a net profit of $7.1m in 2010. This was down slightly from $7.4m a year earlier, but still amounted to a return on equity of 27% and a fairly high return on assets of 1.79%.

Expenses were also brought down in 2010, with Ecobank’s cost-to-income ratio falling to 63% from 67% in 2009.

The bank’s assets grew just 5% during 2010 to $394m, reflecting slow economic growth and weak demand for credit in the country. As such, Ecobank attempted to boost its commission- and fee-based revenues. It launched ‘Rapid Transfer’, which allows for immediate money transfers between any two Ecobank branches, regardless of whether the senders and receivers are customers of the bank. It also increased its foreign currency sales to corporate clients and bureaux de change. This strategy paid off and allowed Ecobank to keep its dividend for the year at virtually the same level as in 2009 – CFA Fr59,698 ($123) per share in 2010 versus CFA Fr58,959 in 2009.

Despite a sluggish economy, the bank is keen to increase its lending portfolio and is especially targeting small and medium-sized businesses, which make up the bulk of Togo’s economy.

Ecobank holds 23% of the assets in the country’s banking system and thinks it can increase its market share by winning business from small companies, most of which are unbanked, having long been shunned by risk-averse lenders.

Trinidad and Tobago

Republic Bank

David Dulal-Whiteway, managing director, Republic Bank

In common with the rest of the Caribbean region, Trinidad and Tobago’s economy has been badly hurt by the global economic downturn, and any business growth within the country has been rare.

However, thanks to its careful sales strategy and focus on risk management and asset and liability management, Republic Bank achieved an annual increase on its net profits in 2010, an improved return-on-equity ratio, a lower cost-to-income ratio and lower levels of non-performing loans. The bank also expanded its assets and maintained strong levels of liquidity and capital ratios.

“Finding growth was a challenge for us,” says managing director David Dulal-Whiteway. “Due to the economic slowdown, there was a reduced demand for loans and as such, maintaining profitability became more difficult. Our subsidiaries in tourism-dependent economies, such as Grenada and Barbados, were also severely hit due to the slowdown.”

New marketing initiatives and products with better terms helped to improve the bank’s share in the loans market, in particular in the mortgage market. Looking to the future, Republic Bank’s strong position should allow it to quickly seize any growth opportunities. “We have a strong balance sheet and our profitability ratios are good,” says Mr Dulal-Whiteway. “We also have a liquid position and strong capital ratios, leaving us well poised to take advantage of opportunities that may arise, whether from up-ticks in the economy or acquisitions.”

Tunisia

Banque de Tunisie

For a country that went through a revolution in January, with president Zine El Abidine Ben Ali having to flee the country and end his 23-year rule after mass protests, Tunisia’s banking system has come through 2011 remarkably well. Although the economy’s expansion ground to a halt this year, credit provision by Tunisian banks grew 10.5% in the first nine months. This was about three times faster than in Egypt, whose revolution came a month after Tunisia’s. Moreover, Tunisian banks are expected to have higher returns on equity (ROEs) this year than in 2010.

Banque de Tunisie, the fourth biggest commercial lender in the country by Tier 1 capital, has managed to come through the crisis strongly. Its earnings in the first half of the year were TDh38m ($26m), higher than those of TDh36m in the first six months of 2010. Mohamed Habib Ben Saad, the bank’s chief executive, says net income for the year should be 20% higher than in 2010.

This success follows a robust performance last year, when Banque de Tunisie made a net profit of TDh56m and an ROE of 13%. Its cost-to-income ratio was a very low 29%, while non-performing loans made up a fairly small 5.35% of its portfolio. They fell from 6.8% at the end of 2008 and 5.55% in 2009.

Banque de Tunisie is committed to keeping a tight leash on expenses, and is targeting a maximum cost-to-income ratio of 35% in the coming few years. It also wants to attain ROEs of roughly 15%.

To do this, it aims to increase its market share of deposits and loans. One of its main strategies will be to entice customers by having one of the best technology platforms in Tunisia’s banking system. If its performance over the past year is anything to go by, there is little reason to suggest it cannot succeed. “Despite all the challenges, the strategy adopted by Banque de Tunisie continues to generate success,” says Mr Habib Ben Saad.

Turkey

Yapi Kredi Bank

Faik Acikalin, chief executive, Yapi Kredi Bank

Faik Acikalin, chief executive, Yapi Kredi Bank

Banking in Turkey is changing, as single-digit inflation gradually becomes the norm and simply investing in government bonds no longer yields extraordinary rates of return. This will push banks to compete much more directly in customer-oriented banking activity, and Yapi Kredi Bank looks to be adapting to the new reality particularly well.

Securities are a relatively small part of its total assets – 21% at the end of 2010, compared with an average of 30% among its private sector peers. And a raft of initiatives has helped the bank to take the lead in generating fee and commission income, which will be vital in the new environment of lower net interest margins.

In particular, Yapi Kredi has taken the lead in developing product bundles, for both retail and small business clients, which incorporate both financial and non-financial benefits. The bank has distributed more than 500,000 bundles to retail customers, and another 100,000 to small and medium-sized enterprises (SMEs), increasing retail product cross-sell from 3.3 products per customer to 3.9, and bringing fees to 26% of total revenues – six percentage points higher than the sector average.

“We are heavily focusing on fee generation, lean cost management and risk-adjusted pricing. This is only possible with a very good knowledge of the client base and the sophisticated customer relationship management systems we have developed to help us analyse the behaviour of our clients and bundle products accordingly,” says Faik Acikalin, chief executive of Yapi Kredi Bank.

The strategy has paid off, with a 26.9% return on equity in 2010, and a 45% rise in profits, both the highest among the top tier private sector banks. Significant improvements in asset quality – bad loans fell to 3.4% in 2010 from 6.3% in 2009 – and efficiency, including cutting loan decision times from 10 days to four days for SMEs, all bode well for continued progress.

Turkmenistan

Halk Bank

The banking sector in Turkmenistan remains mostly state-owned, state-directed, and focused on payments processing rather than lending. But within this context, Halk Bank, descendant of the Soviet-era savings bank, has become one of the most progressive institutions.

The bank is lightly capitalised, with Tier 1 capital equivalent to just over 2% of total assets, but profitable: profits exceeded Tier 1 capital in 2010, to generate a return on assets of 2.3%. The bank has a clear strategy for improving efficiency, and now generates the highest revenues per employee in the country, at $15,000. And it has so far expanded its asset base (by 16% in 2010) without raising any asset quality problems – non-performing loans were at just 0.1% in 2010.

The bank’s modernisation programme aims to usher in a customer-oriented approach, including a vertical sales strategy on the retail side that will integrate the product offerings, and improvements in back-office functions. Flagship branches in the major cities of Turkmenistan are increasing their levels of automation in a bid to raise service standards to a level that can attract the most economically active and affluent customers.

Consumer and mortgage lending are gradually being added to the basic retail customer account services that the bank already offers. Halk Bank is also expanding its ATM network into rural areas, and is preparing to launch its first comprehensive call-centre service.

The bank has also expanded its corporate banking offer, with particular focus on small businesses, to include better borrowing and payments facilities and business advisory services. It offers a business account specifically tailored to start-up companies, with strong support from their local branch. This has allowed the number of small business clients to double in three years, which also generates more opportunities for cross-selling retail banking products to the employees of its corporate client base.

Turks and Caicos Islands

Scotiabank (Turks and Caicos)

Cecil Arnold, managing director, Scotiabank (Turks and Caicos)

Cecil Arnold, managing director, Scotiabank (Turks and Caicos)

Banks in the Turks and Caicos Islands have been facing the problems of operating within a country with growing unemployment, higher-than-usual levels of delinquencies in retail products, and low economic activities.

Thanks to a revised product offering, Scotiabank (Turks and Caicos) maintained a good level of profitability and kept non-performing loans (NPLs) at bay – NPLs actually fell to 2.18% for 2010 from 2.3% the previous year – and retained its exceptional 56.4% retail loan market share. Its return-on-equity ratio decreased from the 2009 figure but was still a healthy 16.1%, while the cost-to-income ratio did not change from 2009’s 57%.

Scotiabank (Turks and Caicos) managing director Cecil Arnold is proud of the bank’s achievements and is keen to highlight its growth in financing for non-residents’ holiday homes, the acquisition of key new corporate clients, and the growth of the banks’ assets.

Scotiabank (Turks and Caicos) has in the past few years formed a new partnership with a local insurance provider to complement the bank’s existing insurance offering; created a partnership with the country’s government to provide the bank with certain financial services; and created a payment programme for corporate clients trading with other businesses in the North American Free Trade Zone.

The banks also launched a new set of products aimed at small and medium-sized enterprises that are more flexible and will allow the deferral of payments. This meant that a number of struggling smaller companies could continue to operate and retain staff.

Uganda

Crane Bank

Ali Kalan, managing director, Crane Bank

Ali Kalan, managing director, Crane Bank

Although starting from a fairly small asset base, Crane Bank has turned itself into one of Africa’s most profitable lenders. Its net earnings rose 61% in 2010 to Ush52bn ($19.4m), amounting to a huge return on equity (ROE) of 43%. This followed ROEs of 41% in 2008 and 37% in 2009, levels that would be the envy of most other banks in the world.

Crane Bank has managed to obtain such profits chiefly by quickly expanding its loan portfolio. This rose 70% in 2010 alone.

Much of this growth has come from targeting Ugandans who previously were not part of the banking system. Throughout the past year, Crane Bank’s officers have embarked on a door-to-door campaign in many parts of the country to sell its products. The bank also opened branches in several rural areas and extended its closing hours from 4pm to 6pm to make it easier for companies and individuals to access its services.

“Crane Bank has been extremely successful in bringing a large number of the unbanked population in to the banking mainstream,” says Ali Kalan, the bank’s managing director.

Crane Bank will continue its network expansion next year. Mr Kalan says its will add another 10 branches to its current 15 as part of its plan to have 50 by 2015.

The lender has so far managed its growth in a sustainable manner. Its non-performing loans ratio was less than 1% at the end of 2010, having been 3.4% a year earlier. And it is the only bank in the country to have paid-up capital of Ush100bn, well above the regulatory requirement of Ush25bn by 2013. “This provides Crane Bank with more than adequate capital adequacy to fuel our ambitious expansion plans,” says Mr Kalan. “This is perhaps the single most significant strength of the bank.”

UK

Santander

Ana Patricia Botín, CEO, Santander UK

Ana Patricia Botín, CEO, Santander UK

With many UK banks struggling to get their return on equity above single figures, Santander once again showed that its tried and tested model triumphs in the most difficult of markets – it managed 16.51% last year as well as a best-in-class cost-to-income ratio of 41%.

The UK market is choppy to say the least, and Santander decided to postpone its planned initial public offering until 2013, but it did not let up on the merging and rebranding of its crisis-made acquisitions.

The rebranding of Alliance & Leicester (A&L) to Santander was completed, involving the transfer of 5 million A&L customers to Santander’s IT platform. Overall a total of 25 million customers from three banks (A&L, Bradford & Bingley and Santander UK) have been transferred onto one IT platform.

In 2010, Santander announced it would acquire 318 branches and more than 40 banking centres from the Royal Bank of Scotland, which the latter was obliged to sell under EU directions as a penalty for receiving state aid. This will bring Santander’s overall branch total to 1700 and increase market share in the politically sensitive small and medium-sized enterprise (SME) sector from 3.6% to 8%.

CEO Ana Patricia Botín says: “Santander UK has embarked upon a commercial turnaround of the bank. In our retail business, this involves launching new value-driven products which reward our customers, and investing to improve our service – hiring more than 1000 front-line roles in the UK and bringing our call centres home. In our corporate bank, we took many steps to better serve UK businesses: we relaunched our Business Banking proposition and further expanded our SME offerings – increasing lending by 27% and creating an extensive support programme to ensure small business growth.”

Ukraine

Privat Bank

Alexander Dubilet, chief executive, Privat Bank

Alexander Dubilet, chief executive, Privat Bank

As foreign-owned banks in Ukraine struggle with high non-performing loan rates, or even exit the market altogether, Privat Bank’s leadership position grows stronger. The flexibility of its business model is key, with a rapid strategic shift away from high-risk sectors such as mortgage lending toward larger corporate clients and transaction banking in both corporate and retail spheres. Corporate client numbers increased by 5.4% in the first half of 2011.

“The major challenge for the bank is general uncertainty in financial markets. Traditional methods of planning and control do not work efficiently under conditions of uncertainty or, as it is called today, ‘turbulence’, but this does not mean that it is impossible to make profits and develop. More new technologies, more customers, more transactions. All of this is our response to the new challenges which are met by banks today,” says Privat Bank chief executive Alexander Dubilet.

Ambitious technology projects helped drive a 57% surge in customer transactions in the first half of 2011. These include cardless ATM withdrawals, and a real-time transfer of money from Privat Bank Visa cards to the Visa cards of any other bank – the first facility of its kind in the world when it was launched in February 2011.

“Our strategy is to provide easy and simple access to banking services for all companies and every citizen of the country. The solution for this ambitious task lies in the implementation of the most advanced technologies, simplifying the means of customers’ communication with the bank while performing any mass-transaction,” says Mr Dubilet.

The other benefit of this strategy is the attraction of customer deposits, which rose by 51% in 2010 and a further 20% in the first half of 2011. Given that turbulence in financial markets, this build-up in stable customer funding to the bank should enable Privat Bank to grow into the economic recovery.

United Arab Emirates

United Arab Bank

United Arab Bank (UAB) was highly active in growing its business in 2010, which is best reflected in its profitability figures. The bank reported an increase in net profits of 9.7% for the year to Dh308m ($83.87m) and it achieved the highest net profit margin at 62.8% of any United Arab Emirates bank in 2010.

UAB’s robust performance is reflected further in other key financial indicators: its total assets rose by 11% in 2010 to Dh7.74bn, while loans grew by 16% to Dh5.53bn at the end of 2010. Its Tier 1 capital rose 9.2% to Dh1.55bn.   

Since its inception in 1975, UAB has predominantly been a corporate bank, with a limited offering in retail. All that changed in 2010, however, when UAB launched its Sadara wealth management programme and an Islamic banking window, which fuelled a phenomenal 50% growth in retail deposits. As a result, its retail portfolio exceeded Dh1bn for the first time in the bank’s history.  Together with the bank’s UAE national and expatriate bundled loan offering, it also led to an impressive 46% growth in retail loans.

UAB also launched a new mortgage product in 2010, which has become a major game-changer in the UAE market and is currently offering the lowest interest rate of 4.99%. The bank also opened three new branches in 2010, taking its branch network to a total of 13.

“We plan to open up to eight more branches to cover all the [UAE] by the end of 2012,” says Paul Trowbridge, chief executive of UAB. “This means we will have doubled the size of our physical footprint over the past three and a half years.”  

UAB remains well positioned for sustainable and diversified growth based on the retail banking platform it has built together with its traditional strength in the corporate banking sector. Indeed, the bank’s corporate division has continued to focus on the businesses it understands the most – medium-sized businesses that operate primarily in the manufacturing and trading sectors.

“Trade finance is where we have made our name and we will continue to support those with good core businesses. Now it seems everyone is chasing what we would call our traditional customers – people who produce and trade real goods – and that is a sector that we have been servicing for 35 years,” says Mr Trowbridge.

Uruguay

Banco de la Republica O del Uruguay

After an economic slowdown in 2009, Uruguay returned to impressive growth in 2010, with gross domestic product up 9%. Banco de la Republica O del Uruguay outstripped even this performance, with the bank’s 2010 net profits growing by a staggering 261% – which represents more than 80% of total commercial banking profits in the country. Its assets and Tier 1 capital also grew by 13.5% and 16%, respectively, giving the bank a 10% capital adequacy ratio and a 14.43% return-on-equity.

Banco Republica grew its deposits market share in Uruguay to 49% in 2010 while also reducing its non-performing loans ratio to 1.2%. Such growth and performance consolidated further the bank’s overwhelming leadership in Uruguay. Investments in technology meant that the bank’s growing branch network was modernised, as was its ATM system and online and mobile banking services.

Banco Republica put great effort in bringing banking services to a wider part of Uruguay’s population and the lender is now proud to say that it banks more than half the total number of commercial banking customers in the country. Further, last year the bank launched its microfinance operation, Republica Microfinanzas, to provide advice and lend to small businesses and low-income entrepreneurs

in the country. It also created a ‘green’ credit line to finance or advice on projects related to clean technology, power efficiency or generally complying with the country’s environmental rules.

US

Capital One

Richard Fairbank, founder, chairman  and CEO, Capital One

Richard Fairbank, founder, chairman and CEO, Capital One

Many banks in the US are still fighting to get back on their feet after the catastrophic effects of the financial crisis. Financial institutions large and small have not yet made it back into the black, and the rest are dealing with regulatory uncertainty and a sluggish economy.

But what for some is a risky environment, others see as a market of opportunities. Starting from 2005, Capital One has been purchasing banks with the intention to diversify away from its core credit card business and, as of last year, it became the 12th largest bank in the US by Tier 1 capital. The bank’s net profits grew by a phenomenal 757% while the return-on-equity ratio rose to 12.23% from 3.71% in 2009.

"We transformed ourselves into a deposit-funded bank before the capital markets collapsed, and we’ve always conservatively managed our balance sheet, avoiding risky funding strategies and securities that led to big problems for many institutions," says Richard D. Fairbank, Capital One's founder, chairman and CEO. "As a result of years of conservative decisions, we were able to deliver operating profits in each year of the recession, and we had solid capital and funding throughout, with strong profitability in 2010 and this year."

Capital One has applied its pricing and risk assessment models, developed in its credit card segment, to the bank market with some good results. In the credit card market, while the average total charge-off ratio of 2011 was 4.74%, Capital One was able to report a much more competitive 2.9%. The bank’s commercial loans portfolio also expanded and non-performing loans were well under the national average.

New products have been tailored to the small and medium-sized enterprises market, with higher-than-average interest rates on current accounts and money management solutions for smaller businesses.

The acquisitions of Hibernia, North Fork and Chevy Chase Bank over the past six years have given Capital One a network of nearly 1000 branches. Subsequent investments have upgraded internal systems throughout the bank and improved its online banking platform.

Uzbekistan

Credit Standard Bank

Uzbekistan remains a largely closed economy with a banking sector that is mostly state-owned and highly underdeveloped. But there are signs of progress, and Credit Standard Bank (CSB) has been at the forefront of this over the past year, with a return on equity of almost 25% in 2010, despite the bank’s high cost base.

Alisher Ibragimov, chairman of CSB’s management board, is especially proud that the bank became the first in Uzbekistan to implement a comprehensive risk management system. This included the introduction of operational risk management that is in accordance with Basel II standards.

“As a result, we managed to minimise losses and improve key financial ratios. Actual profit, loan portfolio and assets figures turned out to be higher than projected,” says Mr Ibragimov.

The bank is also a local leader in technology, and has over the past 18 months begun offering utility bill payments via self-service terminals in its branches – the bank’s first foray into automated payments.

CSB is now developing its first internet banking service, which will incorporate the latest double-step authorisation process using a log-in, password and secret code sent to the mobile phone of the user.

In 2011, CSB was tasked with putting into practice the government’s initiative to boost small business activity. This meant implementing lower fees for small companies on loans, payments and leasing services, with the result that the bank’s small business portfolio increased 24% year on year in the first half of 2011.

“Our key objectives for the coming year are to expand our branch network, implement new products suitable for the local market, and develop internet banking systems. We also see our potential in increasing our share in the retail banking market by providing high-quality services to our consumer clients,” says Mr Ibragimov.  

Venezuela

Mercantil Banco Universal

Venezuela is anything but a stable market in which to operate, and its banks exist under the permanent threat of nationalisation or government imposition.

That Mercantil Banco Universal’s performance has been solid in this volatile environment is a notable achievement, and last year its net profits rose by an impressive 88.4% and its return-on-equity ratio was 34.5%. Assets and Tier 1 capital also grew, by 26.4% and 32.7%, respectively. Good and prudent management meant that its cost-to-income ratio decreased to 40.7%, from 51.5% in 2009, while non-performing loans represented less than 1% of total loans.

“The financial system has experienced an important growth in deposits in the past year,” says Gustavo J Vollmer, president of Mercantil.

“The bank has been able to achieve growth with a healthy balance sheet and cope with a changing regulatory environment. Our business model strategy focuses on consolidating the bank’s market position while keeping its strong loan portfolio quality. The bank has been able to increase its [activities] while maintaining a tight control on non-performing loans, which are well below the system’s average. The bank has been able to achieve this while increasing its financial margin.”

As for the future, Mr Vollmer says: “We expect the economy to continue growing in 2012 and the bank to accompany that growth and continue to expand its loan portfolio.”

Vietnam

Sacombank

Tran Xuan Huy, general-director, Sacombank

Tran Xuan Huy, general-director, Sacombank

The first commercial bank to be listed in Vietnam, Sacombank is also the first Vietnamese bank to expand beyond its home market.

Sacombank has experienced a number of challenges in its domestic market in recent months. Tran Xuan Huy, the bank’s general-director, says that the bank, along with most Vietnamese enterprises, has been under pressure from volatility in interest rates and foreign exchange rates, as well as rising inflation.

“These uncertainties in the global economy have also affected unfavourably the Vietnam economy. However, the bank has well-managed the risks of an economic slowdown and in fact looked for opportunities for future expansion,” he says.

Despite the difficult environment, Sacombank has been able to achieve an average growth rate of between 10% and 15%. It has also been investing in modernising its operational system, management tools and business processes, which has given it a stronger platform from which to expand.

One recent example of the bank’s expansion overseas is the launch of Sacombank Cambodia in October 2011, which was Vietnam’s first wholly owned overseas bank. Aside from Cambodia, the bank also sees potential in the neighbouring market of Laos. “Sacombank will continue to expand its strategic partnerships, alliances and collaborations at home and abroad to become a leading modern and universal retail bank in the region,” says Mr Tran.

In the year ahead, the bank will continue with the developments it made in 2011. Mr Tran says that the bank’s priorities are in developing human resources, modernising banking technology, enhancing financial capacity and expanding the bank’s operation network.

Yemen

Yemen Commercial Bank

Yemen Commercial Bank (YCB) continued to show positive growth in all its main financial indicators in 2010. Particularly striking is the 73.7% annual surge in net profits to YR1.1bn ($5.13m). The San’a-headquartered bank also achieved a 17.6% growth in assets to YR94.1bn and a 10.8% increase in Tier 1 capital to YR8.6bn. Meanwhile, its return on equity rose to 14.8%, following an 8.9% return in 2009.   

However, its cost-to-income ratio remains noticeably high – nudging up to 87.4% in 2010 from 86.7% in 2009, and its non-performing loan ratio rose to a worrying 20.8% from 14.8% in 2009.

The main successes for YCB, according to chief executive and general manager Ayed Al-Mashni, are that “the bank has sustained a high level of liquidity and achieved a growth in net profit of 73.7%, as well as a 20% annual growth in deposits and a capital adequacy ratio of 20.03%.”

These results are particularly impressive given the difficult political climate in the country and the Central Bank of Yemen’s unexpected changes to monetary policy, which saw it increase the interest rates on deposits twice in 2010.

“Our key challenge was overcoming the negative effect on profitability resulting from the central bank increasing interests pricing on deposits twice during the past year while keeping interest rates lower on treasury bills,” says Mr Al-Mashni.

Of the bank’s YR94.1bn total assets, YR43.6bn is invested in treasury bills and certificates of deposit.

Looking forward, Mr Al-Mashni says: “We are focused on remaining a leading Yemeni bank by maintaining high liquidity, strict credit controls and a focus on investments that carry lower risks and costs.

We also want to initiate banking relationships with prime correspondent banks in [place] of those banks that pulled out and ceased their operations in Yemen due to the prevailing political situation.”

Zambia

Standard Chartered Zambia

Standard Chartered Zambia has benefited from Zambia’s rapid growth in recent years (gross domestic product expanded 6.6% in real terms in 2010), which has made the southern African country one of the most sought-after destinations for investors on the continent.

Standard Chartered’s annual net profits grew 50% in 2010 to Z$133bn ($26m). That amounted to a return on equity of 41%, up from 30% a year earlier and 16% in 2008.

Other major indicators were also healthy. The bank had a cost-to-income ratio of 51% in 2010, down from 63% in 2009. Non-performing loans fell from 7% of the lender’s portfolio to 2% during the year.

Standard Chartered developed its retail banking arm during 2010. It opened four new branches, adding to its network of 21, and launched a popular ‘Priority Banking’ product which targets high-net-worth Zambians.

But its main focus was corporate banking. It gained considerable market share in the agricultural sector, which, along with copper mining, largely drives the economy. The bank was a mandated lead arranger (MLA) on a $140m-equivalent syndicated loan for Zambia’s Food Reserve Agency, allowing the government body to buy 470,000 tonnes of maize from more than 300,000 farmers.

Standard Chartered also boosted its presence in Zambia’s fast-growing telecoms industry. It was an MLA on a Z$600bn loan – the largest ever kwacha-denominated syndicated facility – for telecommunications company MTN Zambia.

For small businesses without collateral to post, the bank introduced invoice financing. It offers them up to 80% of the value of an invoice and has targeted mainly companies which are suppliers and contractors of mines in Zambia’s northern ‘Copperbelt’ region.

“We intend to remain the best bank in Zambia; integral to the country’s development and making a difference in the communities where we operate,” says Mizinga Melu, Standard Chartered Zambia’s managing director. “We see opportunities in mining, agriculture and construction and we intend to work along side the government in these sectors.”

Zimbabwe

Stanbic Bank Zimbabwe

After nearly a decade of decline following president Robert Mugabe’s land seizures, Zimbabwe’s economy has picked up since early 2009 when the Zimbabwean dollar was scrapped and a multi-currency regime introduced. Gross domestic product rose 5.7% in real terms that year and 8.2% in 2010.

Banks in the country have benefited. Stanbic Bank’s assets grew 69% in 2010 to $340m. Its profits were $7.8m, amounting to a high return on equity of 34%.

One of the bank’s main focuses has been lending to small and medium-seized enterprises (SMEs). Such businesses are key to Zimbabwe’s continued economic growth. But they still suffer from a lack of access to credit and from banks mostly only providing short-term loans when they do lend.

Stanbic has been among the most active banks in trying to resolve this. “SMEs are a key customer segment for the bank and lending to manufacturers constituted 47% of our total lending as at the end of 2010,” says Joshua Tapambgwa, Stanbic’s managing director.

Stanbic has continued to expand its SME portfolio in 2011. It also doubled the tenors available for these companies when they borrow.

In the retail market, Stanbic introduced Visa debit cards this year. “These reduce the need to carry large cash amounts when travelling internationally [or within Zimbabwe],” says Mr Tapambgwa.

Moreover, it introduced a scheme whereby staff of its corporate clients can take out personal loans with the employer acting as a guarantor. Nearly $10m of such credit has been provided so far.

Stanbic has been strong in the large-scale corporate market, too. It has earned more than $1m in fees from deals such as arranging a $35m loan for Zimbabwe Leaf Tobacco and others for companies in the cotton sector.

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