The Bank of the Year winners from the Americas.

Global and Americas

Scotiabank

Rick Waugh, chief executive, Scotiabank

Rick Waugh, chief executive, Scotiabank

At a time when scandals continue to hit the global banking sector and capital constraints force international lenders to rethink their growth strategy, identifying the world’s best bank requires a close inspection.

With excellent risk management, a strong geographical and product diversification, a recent acquisition in one of the world’s most promising markets and sustained shareholder returns, Scotiabank is this magazine’s choice as The Banker’s Global Bank of the Year.

Scotiabank closed 2011 with a healthy return on equity of 18.8%, which by the end of July 2012 had already gone up to 20.3%. Its long-term return is also admirable, with a 20-year compound annual growth rate of 15.5%, a figure the envy of many of the world’s leading banks.

“Those who manage risk well do particularly well, those who do not manage risk well obviously have issues,” says Scotiabank chief executive Rick Waugh. “Anything we do, we manage according to our risk appetite to make sure that we not only have our risk controlled but that we’re getting good rewards for it.”

Good risk management has helped to boost Scotiabank’s capital strength – the bank’s Tier 1 capital ratio as of July this year was 12.6% – and means it can move fast when business opportunities arise, such as in the case of last year’s acquisition of Colombian lender Colpatria.

“General Electric decided it had to sell its position in a very good bank in Colombia, Colpatria, and because we have good risk management, good capital, and strategically South America is very important to us, we were able to relatively quickly do our necessary due diligence and capitalise on [this deal],” says Mr Waugh.

Scotiabank has intensified its focus on Latin America and the Caribbean over the past decade. Indeed, the bank has had a presence in the region for more than 100 years, having launched operations in Jamaica in 1889, before the Bank of Nova Scotia – as Scotiabank was then known – had an office in Canada’s main financial centre of Toronto.

“In the past several years we’ve done two things: we’ve expanded in some markets and we’ve contracted in some markets,” says Mr Waugh. “We’ve expanded in those markets where we consider that our traditional banking products have strong growth prospects, because their economies are growing, because there’s low level of bank penetration and because we can bring value. At the same time, we contracted in lower growth markets. We have very quietly consolidated all of our European operations, which meant that we closed down branches in many countries.”

Product-wise, Scotiabank has maintained its impressive diversification, with earnings being generated in equal parts in its home market, Canada and abroad, with three-quarters of these earnings coming from commercial and personal banking and one-quarter from wholesale banking. The bank has also expanded its reach in Canada thanks to the recently completed acquisition of ING Direct’s local operations and of investment manager DundeeWealth. Furthermore, its investment banking business has been climbing up the list of top lenders in the oil and gas sector in North America, and of the leading merger and acquisition advisory firms in the same field.

Further expansion is expected in the future, whether organically or through takeovers across Scotiabank’s existing markets, as well as new ones.

Antigua and Barbuda

Scotiabank

The Caribbean is undergoing what is possibly its toughest economic cycle in decades, with economic figures declining across the area. In Antigua and Barbuda, gross domestic product has fallen by a cumulative 25% in real economic output between 2009 and 2011.

Keeping business going, let alone growing, in such an environment is a great achievement, and one that Scotiabank is proud of. The bank has further segmented its client base to make sure that high-cost deposits are attended to by the most appropriate part of the group. Financial advice was also given free of charge in a number of cases, particularly for mortgage products. A mortgage ‘check-up’ was offered to customers in branches and at various supermarkets across the island, where payments, terms and rates could be re-evaluated.

Cash management systems were fine-tuned to offer corporate clients secure online services around the clock. Training to small and medium-sized enterprises was also offered though the partnership with the Antigua and Barbuda Investment Authority with the aim of improving management practices and understanding of taxation, marketing and business software programmes, as well as providing useful networking opportunities.

Furthermore, earlier this year, Scotiabank launched its first event dedicated to small companies to deepen the relationship with this client segment.

“During the Scotiabank Small Business Week, small businesses exhibited their goods and services at our branches and participated in a free seminar on cashflow management. We view [small companies] as very important to the development of the economy,” says Scotiabank country manager Gordon Julien. “The economy has suffered significant contraction in the past three years and has adversely impacted the private and public sector. We intend to be more imaginative in the way we assist our customers to navigate through the difficult economic situation.”

Argentina

Santander Rio

One of the largest and most talked about economies in Latin America, Argentina has not always proved an easy market for private sector banks.

However, Santander Rio has solidified its position and achieved good results year after year. The bank has about 9% share of Argentina’s loan portfolio market and an almost 10% share of the deposits market – the largest among its private sector competitors. Furthermore, Santander Rio has grown its network to reach 324 branches across 21 of the country’s 23 provinces, and has more than 1024 ATMs.

Such business expansion was achieved without compromising the bank’s level of non-performing loans, which significantly diminished in 2011 to 0.77%, from 1.31% in 2010. It therefore comes as no surprise that the bank achieved the highest net income and return on equity among its peers in 2011, with $406m and 43%, respectively. Looking at return on assets, an indicator of efficiency, the bank fared well again with an impressive 4.9% ratio.

“Our main challenge [has been] executing an ambitious plan of investments in our branch network, in an environment of increasing costs and financial volatility,” says Santander Rio chief executive Enrique Cristofani.

“Even in a complex changeable scenario, we were able to balance short-term objectives – continuing being the most profitable and efficient private bank in the Argentine financial system – with our long-term mission, which is focused on investing to improve our services and to expand our business to new kind of clients – most of which are underbanked.”

Looking at corporate customers, Santander has created a standardised and centralised credit-scoring model, which has allowed the bank to tailor credit scoring to a specific sector – for example, by taking into consideration variables such as hectares rented and consumption of fertilisers for agro-businesses.

Bahamas

CIBC FirstCaribbean

Despite being one of the Caribbean’s most developed financial centres, the past few years have been tough on the Bahamas and its banks. Profits have been low while non-performing loans have been spiralling across the banking sector.

CIBC FirstCaribbean has managed to provide a good return to its shareholders while keeping bad loans at lower levels than its competitors. Furthermore, despite having to shrink its assets, the bank strengthened its Tier 1 capital in 2011.

Investments during tough economic times are seldom possible, but CIBC FirstCaribbean still managed to improve its core banking system to achieve straight-through processing and the simplification of certain procedures.

CIBC FirstCaribbean has also tailored products for small and medium-sized companies to help support such businesses during the adverse economic cycle. A special team was created to gain a deeper understanding of customers’ business structures, strategies and goals, so that the best combination of products could be offered to them. This effort stretched across all products, from cash management services to insurance to credit cards. Advisory services were also tailored to help small corporate clients position themselves against competitors and define a suitable growth strategy.

The reporting of certain information to the country’s central bank and its clearing house was also automated, which improved the bank’s accuracy and communication, including with correspondent banks. This move has benefited customers too. Improvements in technology have also improved customers’ internet transfers to other banks, as well as a better processes for straight-through processing of internet payments.

During these tough economic times, CIBC FirstCaribbean has also continued its commitment to philanthropy, organised by the bank’s Comtrust Foundation, which is funded by 1% of the bank’s pre-tax profits.

Barbados

Scotiabank

Investment in non-credit platforms and a careful management of loan delinquencies have helped Scotiabank close 2011 in profit, despite the dire economic conditions of Barbados and the Caribbean region in general.

Scotiabank expanded its offering in cash management, merchant services and treasury services, focused on wealth management advisory services, and introduced new investment products for high-fee generating clients.

On the retail side, a careful evaluation of non-performing loans has helped Scotiabank identify cases where it was appropriate to rewrite or refinance a loan so that customers would be able to comply by paying a lower instalment without going into their savings.

Such initiatives helped the bank to boost its net profits by 6% in 2011, generate a return on equity of 25% and a return on assets of 2.98, while keeping one of the lowest cost-to-income ratios in the Caribbean, at 54%, and a non-performing loan ratio of 4.4%.

Scotiabank undertook initiatives to make sure that its growth will be sustained over the coming years by supporting its most exposed corporate customers. It now provides small businesses with free training programmes in areas such as marketing, customer service and cashflow projects. It also gives technical support through its partnership with the Barbados

Entrepreneurship Foundation and the Inter-American Investment Corporation.
Improvements to its own technical analysis have also been made and the bank’s corporate and commercial division has introduced new tools to evaluate credit lines and improve financial analysis.

Scotiabank also sustained its investment in marketing, staff training and its support to local community projects. Through the Scotiabank Foundation, it has funded HIV/AIDS awareness programmes in schools and has sponsored the Inclusive Play project, which has created a recreational facility to allow children with physical, cognitive and sensory disabilities to play with other children of their age.

Belize

Scotiabank

Good profits and healthy returns set Scotiabank aside from its local peers. The bank closed 2011 with $12m in net profits, a similar level to 2010, while achieving an impressive return on assets of 4.8 and a healthy 15% return on equity.

The bank invested in technology to automate revenue collection processes, and introduced new automated banking machines that offer ATM and additional services on the Scotiabank network, to increase both speed and reliability. Customer service has also been improved through a 24/7 phone line and better trained teams that are able to provide information on bank products relevant to customers. These initiatives have led to more sales leads being generated.

A greater focus was also put on Scotiabank’s small and medium-sized corporate customers. Besides the online banking services available to this specific segment, such as business planning tools, small businesses can now discuss specific challenges they are facing to trained staff so that their credit facilities can be restructured. This has the obvious benefit of reducing delinquencies ratios and it gives companies a chance to put their business and financial position in shape.

In a country where over four people in 10 live below the poverty line, involvement in community projects are of great importance. Scotiabank Education Foundation has already assisted 90 children with grants to help with school fees and books.

The bank has also committed to disburse $20,000 every year to a school for impoverished teenagers, which will go towards funding its feeding programme. The prospect of having a full lunchtime meal has encouraged many students to attend school. A further $30,000 was given to the Special Envoy of Children and Women to build of a centre for people with disabilities.

Bermuda

HSBC Bank Bermuda

Despite tough economic conditions, HSBC Bank Bermuda closed 2011 comfortably in profit and gave shareholders an impressive 8% return on equity. The bank’s efforts to make its processes more efficient have also meant that its cost-to-income ratio decreased to 55%, two percentage points lower than the previous two financial years. HSBC Bank Bermuda’s focus on the highly lucrative business of wealth management, and its closer collaboration with its global banking, markets and insurance divisions have generated new revenues, as well as strengthening product offering and relationships with clients.

“We have made good progress in wealth management, having distributed structured products to our individual clients looking for investment alternatives and the security of principal-secured opportunities,” says HSBC Bank Bermuda chief executive Richard Moseley. “We have also assisted our Bermuda insurance customers with the management of their non-US dollar catastrophe claims by providing value-added foreign exchange advice and foreign currency accounts.”

Investment in technology has also improved HSBC Bank Bermuda’s systems for sending and receiving domestic and international payments and integrating various banking services into a single communication channel which corporate customers can use, saving time and, ultimately, money. As a testament to these and other improvements, the bank’s corporate deposits have grown considerably. With smaller corporate customers in mind, HSBC Bank Bermuda has also joined forces with the Bermuda Economic Development Corporation to provide training and mentoring to small entrepreneurs.

The bank is keen to develop collaboration between different parts of its business. Mr Moseley says: “We are expanding our collaboration with the global banking and markets [division] to provide new products such as rates and foreign exchange options. We want to provide our clients with the international products they expect from HSBC.”

Bolivia

Mercantil Santa Cruz

By far the largest bank in Bolivia, Mercantil Santa Cruz has retained its leading position in the country and improved all key performance indicators in 2011. Net profits for the year grew by 36%, return on equity was 23.4% higher than 2010, while assets and Tier 1 capital expanded by 16.4% and 32%, respectively. Furthermore, the bank showed an improved cost-to-income ratio of 77.57% and a lower non-performing loan ratio, which was 3.42% in 2011 – down from 4.61% in 2010 and 6.33% in 2009.

In a clear sign of recovery from the turbulence of 2010, fomented by rumours that the government may freeze bank deposits, these grew by more than 17% last year at Mercantil Santa Cruz. Such expansion was also helped by investments in technology, which resulted in the creation of an electronic banking platform that can be accessed 24 hours a day through kiosks, the internet and ATM machines. Other new services were also added to ATM terminals, which now total 250 units and represent the largest network in Bolivia.

Being predominantly a retail bank, Mercantil Santa Cruz has paid greater attention to risk diversification over the past few years. The lender improved its relations with international banks and increased its trade finance portfolio – it now owns the second largest market share of trade finance and treasury operations in Bolivia.

Future expansion is also planned in the smaller corporates segments, where the bank has invested in staff training and better risk assessment and has created new products and improved existing ones. This means lower interest rates and more flexible repayment facilities for smaller customers to help during tough economic cycles. In association with other banks, Mercantil Santa Cruz created a business for the secure transport of cash and valuables. This, along with its new cash-processing unit, has helped reduce operating costs.

Brazil

Bradesco

Covering as much ground as possible has been a constant goal of Bradesco, which is now the only private sector bank in Brazil to have a presence in each of the country’s 5500-plus municipalities in Brazil, with 66,000 service points. This has helped the bank to meet increasing demands generated by social mobility, as well as include a large portion of lower income customers in the banking network – for Bradesco, these customers now represent about 30% of account holders.

This did not mean that Bradesco’s focus on high-quality loans got lost, however, and in 2011 the bank kept non-performing loans at 4.8% of its total portfolio, a figure lower than that of its domestic competitors.

“Bradesco is reaping the benefits from the expansion of its network carried out in 2011; we achieved our aim of having a presence in 100% of Brazil’s municipalities and the first results are being seen [this year],” says chief executive Luiz Carlos Trabuco Cappi.

“On top of this, access to the banking system is becoming more widespread as people have higher purchasing power for consumption and want financial products and services such as loans, savings accounts and insurance products. The other side of the coin is the self-discipline we imposed. The iron control we exerted over current expenses has lead to Bradesco’s results.”

Despite a deceleration in Brazil’s economic growth, Bradesco secured an annual net profit increase of more than 14% in 2011 and gave shareholders a 21.3% return on equity. Looking ahead, the bank is confident that improved economic prospects will lead to even greater results.

“Brazil’s economic situation points to a resumption of growth and lower defaults, with a reduction in income inequalities and regional differences,” says Mr Trabuco. “This trend is creating opportunities for products linked to credit, particularly long-term lines to buy homes. Credit cards are another product with great expansion potential. Insurance is a segment that will grow at a fast rate too.”

Canada

Scotiabank

With the highest return on equity among leading local lenders, an excellent risk management record and a wise expansion strategy, the award for Bank of the Year in Canada goes to Scotiabank. The bank’s return on equity was 18.8% in 2011, with net profits of C$5.27bn ($5.28bn), 17.6% higher than 2010’s figures. Tier 1 capital and assets also expanded by 12.4% and 9.2%, respectively.

A strong capital position has enabled the bank to act quickly on interesting acquisitions. Locally, Scotiabank bought investment manager DundeeWealth and, earlier this year, ING Direct’s Canadian operations. Internationally, the bank has expanded its presence in one of Latin America’s fastest growing markets, Colombia, with the takeover of lender Colpatria in late 2011, which has already generated impressive results.

Greater collaboration between corporate banking, investment banking and wealth management have led to a wider product range being offered to Scotiabank’s customers both, in Canada and internationally.

Support to small and medium-sized enterprises (SMEs) has also grown. In Canada, loans to SMEs reached $10.2bn in 2011, up from $9.2bn in 2010, while a new high- interest savings account for small businesses was introduced and the number of dedicated account managers and branch managers with small business experience grew. Internationally, SME lending grew by 15% to $3bn in 2011 and specialised cash management services were introduced.

Scotiabank is also focusing on the sustainability of its exposure to household debt and residential real estate markets – the biggest threat looming on Canada’s horizon. Of the bank’s $153bn mortgage portfolio, 60% is insured while the loan-to-value ratio on the remainder is a conservative 57%.

Chief executive Rick Waugh is proud of Scotiabank’s profitability, strength and growth potential. “We are very diversified by revenue stream, by product line and by geography, and that diversification has allowed us to weather storms and attain an industry-leading return on capital,” he says.

Cayman Islands

Cayman National Bank

The leading financial centre of the Caribbean islands has not been immune to the regional economic recession, and gross domestic product growth has halted in the Cayman Islands over the past few years. As the local economy improves, however, so is the performance of its banks.

In 2011, Cayman National Bank generated bigger net profits while delivering a higher return to shareholders than in 2010, at just under 7%. The bank retained a conservative approach to governance, which helped to reduce non-performing loans to 0.84% last year.

A focus on risk management has helped in dealing with the increasing complexities of regulatory compliance, particularly in areas such as the risk-scoring of accounts and stress-testing.

On the retail side, the bank has increased its ATM network and upgraded several machines with new software which has also helped marketing initiatives. When it comes to loans, Cayman National Bank has placed an emphasis on long-term assets, so rather than consumer loans, the bank launched initiatives to expand its land loans and mortgage products, particularly for first-time home-owners.

Customer access to personnel and branch services was also improved, and two of the bank’s branches are now open at weekends, while a new service centre and ATM were installed in the Little Cayman region, making Cayman National Bank the only lender with a presence on all three of the British overseas territory’s islands, as well as in the less developed eastern district of Grand Cayman.

As always during challenging economic times, small businesses become riskier clients. Cayman National Bank has worked on diluting such risk by partnering entrepreneurs with business consultants that the bank has a working relationship with so that small companies can receive assistance with budgeting and cashflow forecasting. More directly, the bank has kept pricing at the lowest possible levels and acted when necessary to ease repayment pressures, which involved allowing clients to skip payments. Furthermore, the bank’s support for the social and economic development of the Cayman Islands has continued through donations to various charities working in education, sports and culture.

Chile

Banco Crédito e Inversiones

Despite the weakening of Chile’s economic growth and the strain that the international financial environment has put on the bank’s risk management operations, Banco Crédito e Inversiones (BCI) closed 2011 with record net profits of 261bn pesos ($543.9m), an increase of about 18% from the previous year. Return on equity was above 20% and the cost-to-income ratio less than 45%.

This strong performance was fuelled by a series of initiatives that improved efficiency, processes and business lines. BCI focused on transparency and the simplification of documents for customers, and it introduced financial literacy programmes for customers new to the banking network. It also introduced a biometric identification system to eliminate the risk of identity theft and improve profiling techniques for loan applications and it invested in customer service. Furthermore, the restructuring of the corporate and investment bank created a better tailored unit for corporate finance products.

Chief executive Lionel Olavarria is proud of the bank’s performance and of its success in international markets, where BCI successfully raised debt through a syndicated loan of $325m in Asia and the issue of its first regional bond in Mexico.

Mr Olavarria says: “We challenged ourselves [with a new, full-service] corporate finance business, by restructuring the corporate and investment bank, where we are seeing spectacular results. On the retail side, we launched a customer experience strategy with [entertainment company] Disney’s advisory and we developed an innovative product that allowed us to instantly deliver loans through a biometrical technology system.”

As for the future, BCI is looking to achieve greater financial successes, without losing sight of the needs of smaller corporate customers. “We want to achieve higher returns and a lower cost-efficiency ratio than the market, through an outstanding customer experience, leadership in innovation and a cost-efficiency strategy,” says Mr Olavarria.

Colombia

Banco de Bogotá

Banco de Bogotá has established a sound position in the Colombian banking sector, based around its strong market share, good risk management and appropriate funding strategy. This alone would make it a more than suitable candidate for the award as the best bank in Colombia, but thanks to the successful acquisition of BAC Credomatic in central America, the bank now undoubtedly deserves the accolade.

The deal has strengthened Banco de Bogotá’s position as a regional player, with a presence in 12 countries, while also developing commercial and financial ties between Colombia and central America thanks to its offering of improved loan and foreign trade products for its customers. In particular, Banco de Bogotá’s expertise in corporate banking and BAC’s know-how in credit cards and personal banking have created great synergies for the larger group. Revenues from the new regional business have contributed to better results for the bank, which closed 2011 with net profits more than 40% greater than those for 2010, while its Tier 1 capital doubled.

Investors have recognised the bank’s stronger business profile by enthusiastically welcoming its dollar-denominated bond issue at the end of 2011 for a total $600m, which was six times oversubscribed and given investment grade by the three international rating agencies.

Product wise, the bank launched a series of debit and credit cards and related services, such as payroll debit cards, transportation payment cards and cards for premium customers. New insurance products were also introduced as well as an ambitious expansion plan in the mortgage sector, which includes a more focused strategy for advisory services on loan terms, appraisals and loan processing.

Loans to small and medium-sized businesses grew by more than one-third in 2011 and commitment to micro-entrepreneurs was maintained through a presence in more than 200 towns across Colombia.

Costa Rica

Banco de Costa Rica

Despite the global challenges of 2011, last year was a successful one for Banco de Costa Rica, which grew net profits by more than 20%, delivered a return to shareholders of almost 9% and kept non-performing loans around the 2% mark.

Chief executive Mario Rivera is proud of the products and systems the bank has introduced for its customers, such as the ‘Pague Fácil’ platform, which allows customers to make remote payments by utilising an easy-to-use connection to the bank’s systems; or the fee and tax collection system created for government institutions.

“We have incorporated new ways of connectivity for payment of services through our website,” says Mr Rivera. “More municipalities were included, [as well as] professionals, schools and colleges and companies and social care [organisations].”

Service and products offered at the bank’s branches have also been improved. “We have been expanding our commercial offering through new insurance policies and diversified mutual funds, among other services,” says Mr Rivera.

Improvements in the retail offering were also made and the bank registered a larger use of debit and credit cards, internet and mobile banking, and foreign exchange operations. The retail segment contributed strongly to the expansion of the bank’s credit products, which were 18% larger than the previous year and where more than one-third was denominated in US dollars.

As for its expansion plans, Banco de Costa Rica will consolidate the business of INS Pensiones, which it acquired this year, into its existing pension business, strengthening its financial product offering. It also plans to develop a broader offering for the small and medium-sized enterprise customers, as well as embedding social and environmental stability criteria across a series of banking products. The bank’s commitment to corporate social responsibility will include technology investments, according to Mr Rivera.

Dominican Republic

Banco Popular Dominicano

Despite the challenges of tough international markets and global economic downturn, the Dominican Republic’s gross domestic product expanded by a few percentage points in 2011, helping local banks grow their businesses.

Banco Popular Dominicano may not have been the lender with the largest profit increase in 2011, but it delivered a very healthy return on equity to shareholders of more than 20%, it showed a high 2.56 return on assets, and, even more impressively, kept non-performing loans comfortably below 1.5%. This performance was achieved in no small part thanks to investment in technology, an improvement in the bank’s processes, and greater collaboration between business areas.

“As our country continues to develop, so is our banking industry,” says chief executive Manuel A Grullón. “[Pressure from] new competitors, customers and regulators became our biggest challenge. New fiscal burdens, high oil prices and restrictive fiscal policies resulted in high interest rates and a slower commercial environment, which consequently made our goals for the year challenging to achieve. We focused our efforts in three main directions: the execution of operational initiatives to become a more efficient bank; the development of new business strategies to tap into new opportunities such as the local capital markets; and the continuous efforts to improve the level of customer satisfaction among our clients across all segments.”  

As for the future, the bank wants to expand its market share, improve its capital markets expertise and widen its customer base to include a greater number of small businesses.

“We will continue to pursue market share,” says Mr Grullón. “To achieve such a goal, we will rely on strengthening our product and services portfolio and customer satisfaction. We see clear opportunities in our local capital markets, the creation of non-interest income solutions and reaching out to an ever bigger [small and medium-sized enterprise] client base.”

Ecuador

Produbanco

As is the case in many developing countries, banking in Ecuador is not easy. While a faster economic growth, pushed by high oil prices, has contributed to higher bank profits, restrictions on ownership structures, the complex nature of governance rules, and taxes on certain financial instruments continue to pose challenges for local banks.

Produbanco has taken advantage of the improved economic conditions and on the back of larger loan portfolios, the bank successfully closed 2011 with net profits 50% higher than in 2010.

The bank also maintained a strong capital profile, and in anticipation of a major business expansion – of the $180m it has in new assets, 75% are loans – Produbanco retained as capital more than half of its 2010 profits.

Furthermore, to make sure it would manage higher loan demand in the most profitable way, the bank restructured some of its units so that each segmented group would generate more focused products and services. Consumer banking, for example, was split between personal and small and medium-sized enterprise banking to acquire better insights into the needs of different clients.

Cards security was also a priority and the bank started the migration of its debit cards to a new chip model. Produbanco’s affiliation to Visa meant that this improvement would also allow the card to be used outside of Ecuador. Further, an SMS to confirm electronic transactions was introduced to reduce fraud cases, which resulted in a sharp fall in claims for information theft though phishing and other techniques.

On commercial loans, good progress was made in track financing. Deal volumes have grown, making Produbanco one of the leaders in this space, and track financing products tailored towards corporate and small and medium-sized businesses, for both the commercial or personal use of firms’ business executives, have been introduced.

El Salvador

Banco Agrícola

Over the past few challenging years, with tough economic conditions and limited growth, Banco Agrícola has focused on improving efficiency, reducing costs and maintaining adequate levels of quality assets.

Its efforts have paid off and net profits were the highest ever achieved, at $110m for 2011, an impressive 46% growth from 2010. At the same time, non-performing loans showed an annual decrease to 2.73%. The bank also secured a 30% market share in loans and, although lower, a 28% share of the deposits market. This decrease was due to a change in the funding sources structure, which enabled the bank to reduce funding costs while retaining the lead in the deposit market. On the other hand, the bank’s loan portfolio grew from the previous year, as did its credit card business.

“The past few years have been particularly difficult economically for El Salvador, posing big challenges for financial institutions in terms of growth, profitability and credit quality,” says Banco Agrícola chief executive Rafael Barraza.

“As the industry leader, Banco Agrícola overcame very aggressive attempts by other banks to capture market share and still found profitable opportunities to develop its core business. Banco Agrícola increased its loan portfolio by 3.6% in a tough economic environment and we also significantly increased participation in the credit card segment. Our return on equity was close to 18%, which was the best in the industry.”

Looking ahead, the bank aims to continue growing by leveraging on its large network of ATMs and financial services kiosks, and continuing to serve a larger and larger segment of El Salvador’s population, thus contributing to the economic development of the country.

“We will continue to maintain market leadership and profitability, improve our model of distribution channels and introduce innovative products and services to help our clients achieve their goals,” says Mr Barraza.

Guatemala

Banco Industrial

The slow growth of Guatemala has presented a particularly hard challenge for Banco Industrial. Maintaining net interest margins at a time of low interest rates and limited demand is not an easy undertaking – particularly for a country such as Guatemala, which has very low banking penetration. But thanks to greater focus on more profitable segments and diversified funding sources, Banco Industrial closed 2011 with a healthy profit and an increased loan portfolio, and with a non-performing loans ratio well below 1%.

While deposits grew by 9% in 2011 when compared with 2010, and continue to be the bank’s main funding source, Banco Industrial also accessed international capital markets with successful capital placements, a strategy which it continued into 2012.

“Recently, we made a debt issuance of $500m in the international debt capital markets, representing the largest non-sovereign debt issuance from a privately owned issuer out of central America,” says Banco Industrial international division manager Luis Fernando Prado. “The transaction solidified Banco Industrial as a unique vehicle for international investors to get exposure to the country and to the financial industry of central America.”

Investments in the network also contributed to the bank’s success. A total of 22 new branches and 280 ATMs were added to the network, and a number of kiosks were set up for internet banking operations. Internet banking itself was improved thanks to the creation of a smartphone application and, at the beginning of 2012, the bank officially opened its first remittance office in Chicago, adding to existing offices in the US in New Jersey and California. Furthermore, Banco Industrial started operations in El Salvador as part of its expansion strategy across central America.

“There is a positive outlook for the economy of the region and we will continue to grow and consolidate our operations in the northern triangle of central America – Guatemala, Honduras and El Salvador,” says Mr Prado.

Honduras

Banco del Pais

Despite the challenging economic environment in Honduras, Banco del Pais has enjoyed another successful 12 months. Although net profits were not significantly different than those for 2010, the bank still provided a healthy 23.6% return on equity to investors in 2011 and it expanded its size by a quarter, with a 24% asset growth. Its loan portfolio also grew considerably to $938m, a figure almost 20% higher than in 2010, while non-performing loans decreased to less than 1%.

In 2011, Banco del Pais ventured into microfinance to serve the high number of small entrepreneurs across the country, which represent the vast majority of Honduras’s workforce. For the new microfinance unit, the bank adopted procedures which had been proved successful elsewhere in Latin America. The focus on getting its microfinance business model right paid off, and Banco del Pais proudly points to the fact that it has lent a total of $1.9m to more than 1000 microentrepreneurs in its first 18 months, with a delinquency ratio close to zero.

“Our main achievements during the past year were [reaching] revenue goals while maintaining a healthy loan portfolio in all of our business units and launching our microfinance department with results that have exceeded our initial expectations,” says Banco del Pais chief executive María del Rosario Selman-Housein.

Banco del Pais’s successes also included business growth in mortgages, consumer loans and credit cards. The bank added 47 new ATMs to its network and 17 new points of service across the country. Ms del Rosario Selman-Housein is confident that Honduras will continue to provide excellent business opportunities both in retail banking and microfinance, and that Banco del Pais will grow its presence in central America thanks to its new owner, Bicapital Corporation, a Panama-based financial company which is also the holding company of Guatemala’s Banco Industrial.

Jamaica

National Commercial Bank Jamaica

The 2011 financial results of National Commercial Bank Jamaica (NCB Jamaica) showed a profit growth of about 18%, a return on equity of more than 20%, an impressive 4.67 return on assets, larger assets and stronger capital. Such figures seem even more remarkable when Jamaica’s competitive market and unstable economic conditions are taken into consideration.

“We were faced with shrinking margins and uncertain local and global economic conditions. In addition, non-traditional financial services players have become an increasing threat and customers’ preferences continue to shift,” says NCB Jamaica group managing director Patrick Hylton.

Crucial to the bank’s success has been a good performance in key product areas. Auto loans were improved and promotional rates were offered on other loan products, while a facility tailored for female entrepreneurs was launched in partnership with the Women Business Owners organisation. Some changes were made to deposit products too, where dormant fees were discontinued.

“We have maintained leading market share in key areas such as loans and deposits, while maintaining a strong capital base and strong liquidity,” says Mr Hylton. “We have also continued to be a market leader in terms of contributions we have made to education and community building initiatives.”

The bank paid greater attention to small business and created a special unit to speed up loan application procedures and improve efficiency in its branches. Small corporate clients were also offered a broader choice of products to help with business expansion, working capital requirements and equipment financing. All of this will continue in 2013, says Mr Hylton, alongside investments in technology.

“In the coming year, NCB Jamaica will focus on enhancing sales and service excellence, operating efficiency and further investing in the development of our employees,” says Mr Hylton.

Mexico

Banco Santander

Raising $4.13bn in Mexico and the US, this year’s dual listing of Banco Santander’s local Mexican operations was impossible to miss. The headline-grabbing, five times oversubscribed deal is testament to the success that Santander has had in the country, with net profits growing by almost 35% in 2011, a return on equity of 21.7% and return on assets of 2.22%, among the highest efficiency ratios in Mexico. Many business lines grew, either organically or due to acquisitions, and contributed to the extraordinary performance.

On top of this, last year, Santander acquired GE Mortgage and launched two new products with low interest rates and annual costs, which helped the bank increase its mortgage market share to almost 16%. In consumer credit, Santander expanded its consumer loan portfolio by 34.2%, its credit card business grew by more than 14% and insurance products grew by almost 23%. Furthermore, financing of the infrastructure, tourism, agribusiness and real estate projects of corporate clients were 24% larger in 2011 than in 2010.

“Santander Mexico has combined its efficiency, profitability, an aggressive business model and a healthy portfolio,” says chief executive Marcos Martinez. “Thanks to this, we have surpassed our competitors and we have shown our strength in the current volatile global scenario. We have achieved a double-digit growth in our strategic businesses; we are the most profitable bank in Mexico, even though we rank fifth in number of branches, personnel and ATMs.”

But such success should not leave any room for complacency, and Mr Martinez is keen to continue the bank’s growth and improve its presence in more product areas. “We plan to consolidate our commercial banking model in strategic segments such as small and medium-sized enterprises, mortgages and consumer lending. All of this will foster growth, employment and support families,” he says.

Nicaragua

Banco de la Produccion

In contrast to the world’s shaky economic outlook, Nicaragua’s real gross domestic product grew by 4.7% last year, an improvement from 2010 and a clear sign of recovery from the 1.5% contraction it experienced in 2009. Unsurprisingly, the local financial sector also experienced a fast expansion. Banco de la Produccion closed 2011 with an impressive 83% net profit increase, a return on equity of almost 20% and double-digit expansion in assets and Tier 1 capital.

“We have been diligent but aggressive enough to adjust, innovate and continuously improve our organisational structure and services while maintaining our solid position as the largest bank in Nicaragua in terms of assets and deposits, all under turbulent international economic and financial market conditions, and with the presence of leading global conglomerates [in the country],” says Luis Rivas, general manager of Banco de la Produccion.

“Banpro attained outstanding financial results while expanding its dominant leadership and caring for its community. We gained market share in total assets reaching a remarkable 34.3%. We also increased market share in deposits to 35.8%.

Furthermore, Banpro accompanied its growth with a 72% increase in operating profits, an 83% increase in earnings per share, and a 19.5% return on equity.”

Such results were achieved thanks to a series of initiatives to streamline processes and develop better management policies. Some of the more important changes were found in risk management, where the bank improved its practices. This resulted in better foreign exchange management that ultimately produced higher earnings.

Looking ahead, a greater focus will be placed on risk management. “We plan to continuously improve our processes, balancing risk with returns,” says Mr Rivas. “We will focus our efforts to accomplish our goals and obtain sound and solid growth, directing resources to profitable business sectors.”

Panama

Banco General

Based in one of the faster growing markets in Latin America, the future looks bright for Panama’s Banco General. One of the best developed and most liquid financial centres in central America, Panama enjoyed an impressive 10.6% gross domestic product growth in 2011, while estimates for 2012 range between 8.5% to 10%. Meanwhile, the country has now received investment grade status from all three major international rating agencies, and the Panama Canal extension looks set to triple the waterway’s current revenues once completed in 2014.

Panama’s growth is mirrored in Banco General’s record financial results, with net profits of $232m in 2011, 16% higher than the previous year, and assets worth $9.49bn, almost 13% larger than in 2010, which confirm the bank as the largest locally owned lender.

Banco General is proud of its high-quality dollar-denominated fixed-income investments, its highly diversified loan portfolio, its prudent loan loss reserves, and its stable and diversified retail deposit base and solid capital levels. The bank retained the lead in Panama for retail deposits, with just under 26% of the market share, as well as the top position in residential mortgages, taking 28% of that market. Banco General fared well in corporate lending too, where it increased volumes by almost 16%, while commercial banking activities were more than 13% larger than in 2010.

Risk management practices have continued to remain focused and the non-performing loan ratio was a mere 0.61% at the end of last year. Despite Banco General’s established position, competition in the Panamanian banking market is tough for all players. To remain ahead of its game, the bank has continued to make improvements to its processes and systems, which helped reducing the time to open an account by one-third. Disbursement time for commercial loans was also reduced and new products were offered to a wider number of corporate clients, such as leasing and corporate credit cards.

Paraguay

Sudameris Bank

Paraguay’s economy grew by a healthy 4% last year, an enviable performance by many standards, but still is a far cry from the country’s recent 15% gross domestic product expansion. Despite this lower growth, and severe weather conditions that hit the agribusinesses and farming sectors towards the end of 2011, Sudameris Bank recorded an impressive 54% net profit growth last year, and delivered a 26% return on equity to its investors.

“Over the past 14 months, Paraguay has suffered from its worst drought in 75 years, the worst frost in the past 22 years, and two spells of foot-and-mouth disease; as a bank with more than 30% of its activity in the cattle and cereal industries, Sudameris has had to adapt rapidly to provide our clients with adequate support to get through this difficult but temporary situation,” says Conor McEnroy, chairman of the bank.

“Sudameris has managed, despite the harsh economic environment, to continue growing its loan book while maintaining a very low non-performing loan ratio, at a little over 1%. At the same time, the bank has continued its network expansion, both in branches and ATMs, to get closer to its clients across the country. Finally, despite prudent and conservative management, the bank has achieved more than 20% return on capital.”

To ensure that such growth will be sustained, Sudameris has invested in a series of initiatives which have continued to perform well in 2012. These range from improved IT platforms to marketing campaigns to closer partnerships with multilateral agencies. The latter partnership has helped to introduce innovative products into Paraguay, such as the ‘grain stock financing’ tool, designed with the support of the International Finance Corporation. The product allows farmers to deposit their grain in pre-approved silos and issue a certifying document that can be discounted by the bank.

“Among other projects, Sudameris Bank has embarked on a vast IT modernisation programme in 2012 that will culminate in the coming months with the introduction of a completely revised e-banking proposition to our clients,” says Mr McEnroy.

“Paraguay is expected to grow between 12% and 14% in 2013; this will bring tremendous growth opportunities for Sudameris from all sectors of the economy.”

Peru

Banco de Crédito del Peru

Peru’s fast-growing economy has created business opportunities for its banks but also posed threats typical of a market which is recruiting newer, riskier customers to its financial sector.

Banco de Crédito del Peru (BCP) has managed this expansion consistently well. Last year, net profits grew by more than 20% while non-performing loans were kept at 1.53%. New credit cards were launched to cater for both middle-income and lower-income customers, while an alliance with a local electronic equipment supplier for consumer finance products has given BCP access to new clients and a better understanding of how to tailor loans to the low-income segment.

“[Our main challenges have been] managing growth in the lower, riskier but fastest growing sectors of our population, getting all the risk management tools and processes in place to accompany that expansion and maintaining our leadership in our traditional corporate sector,” says BCP chief executive Walter Bayly.

“[Our achievements have been] the implementation of our strategy to increase bank penetration; the successful implementation of an expansion strategy in the corporate sector through carefully picked acquisitions; and the general development of our business.”

The bank’s growth strategy was not limited to the domestic market, and included international acquisitions on which the bank wants to build a profile as a regional investment bank. Such ambitions go hand in hand with the integration of the stock exchanges of Peru, Colombia and Chile under the MILA project. Last year, BCP acquired Colombian broker Correval and earlier this year it purchased Chilean financial firm IM Trust.

“The opportunities the Peruvian market offers in commercial banking are still the focus of our organisation, as we believe strong growth can still be achieved for many years to come,” says Mr Bayly.

Puerto Rico

Banco Santander Puerto Rico

Puerto Rico is dealing with a protracted economic recession that has caused job losses, inflationary pressures, an excess supply of new residential real estate and the risk of foreclosures. Despite this, Banco Santander closed 2011 once again in the black, and with net profits 49% higher than at the end of 2010. Return on equity has been steadily growing and was

12.6% last year, while both cost-to-income and non-performing loans ratios declined to 51% and 5.8%, respectively.

“Santander has managed to outperform local peer banks in terms of asset quality, profitability, efficiency and non-performing loan ratios,” says Banco Santander Puerto Rico chief executive Román Blanco.

“By implementing our unique business model that emphasises commercial productivity, capital preservation and revenue diversification, we have been able to deliver positive returns to our shareholders since the second quarter of 2009.”

The bank has encouraged co-operation between business units to increase cross-selling business opportunities and focused on higher value clients. On the cost side, it increased efficiency by automating control processes and various manual activities. Investment in technology provided both improved internal systems, from the core banking system to the procurement model, and a new mobile banking platform.

“Santander aims to be the best financial institution in Puerto Rico and we will further succeed by remaining focused, among other things, on achieving higher commercial productivity, increasing revenues from fee-based businesses, enhancing efficiency and continuing to differentiate from peers in credit quality, strong capital, liquidity, profitability and service quality,” says Mr Blanco.

“Some areas of opportunity include the design of structured products, the sale of credit-related and open-market insurance products, and expanding our small and medium-sized enterprise segment.”

Trinidad and Tobago

First Citizens

Growing market share while keeping bad loans at bay is a hard challenge in a slow-growth environment. Trinidad and Tobago’s First Citizens closed 2011 with net profit growth of almost 15%, while it also restructured risk management policies to provide better oversight and an improved monitoring of the performance and achievements of individual units within the bank.

First Citizens invested in technology and processing to improve security and the ease of use of products and services. These investments include chip-and-pin technology to provide greater security to credit card customers; a higher standard of performance from staff within the bank’s branches; voice-activated telephone customer services; and data management tools.

Furthermore, First Citizens has created new services for its more sophisticated clients by launching an online platform in partnership with a subsidiary of Bank of New York Mellon, where clients can invest in commodities, bonds and structured products. Improvements in the small businesses segment were also made and a new profiling system was introduced. This allowed for a more targeted sales approach. The bank has also looked at expanding its business outside Trinidad and Tobago and has set up offices in Costa Rica and Barbados.

“Our main successes included improving risk management and compliance processes, making further penetration in existing and new market segments, and keeping our people engaged and motivated,” says First Citizens group chief executive Larry Nath.

“We are particularly happy with our progress in alternative delivery channels, especially payments and new card-based products. In 2013 our bank will become more of a regional enterprise. Our main opportunities will be in the small and medium-sized businesses and consumer banking segment, as well as the deployment of new technology to better support our front line and bolster fraud prevention.”

Uruguay

Banco de la Republica Oriental del Uruguay

Leveraging on its dominant position in Uruguay, Banco de la Republica Oriental del Uruguay (BROU) not only achieved a phenomenal growth in 2011, closing with net profits 60% higher than in 2010 and assets 17.5% larger, the bank also accomplished its economic development mandate and has increased efforts its with regards to financial inclusion and the support of small entrepreneurs.

“The main challenge faced by the bank, as a multiple, commercial and development bank operating in a highly competitive market, is to consolidate, year after year, our market leadership,” says BROU president Fernando Calloia.

“With a market share of almost 50%, the bank aims to reach the highest quality standards in management and customer service. The performance of the bank has been largely satisfactory, both in achieving excellent economic and financial indicators as well as in complying with its objectives to promote bankarisation and economic development.”

Further, BROU renewed its commitment to sustainable investment projects, participating in the financing of alternative energy ventures and continuing its ‘green credit line’, which includes advisory services for the detection of opportunities, the implementation of clean production systems and the relocation of premises for environmental reasons.

“It is worth mentioning the support given by the bank to the sustainable development of Uruguay, being the leader in the financing of long-term investment, but with particular concern for the protection of the environment,” says Mr Calloia.

“Looking ahead, the bank is aiming to complete its modernisation process, from a traditional bank which is more than 100 years old, to a modern institution that has adapted to the requirements of an ever-changing world.”

US

Citi

Back in the black for a second consecutive year, Citi has recovered from the lows of the financial crisis, just as the bank enters its 200th year of existence.

Net profits for 2011 were up on 2010’s figures and its non-performing loan ratio was almost halved. Despite the challenging domestic market, Citi has expanded its loan portfolio to small and medium-sized businesses in the US, which reached almost $8bn last year. Internationally, the bank secured record levels of revenues from its transaction services division and trade finance in particular. Improvements were also made in cost management, resulting in expenses being several percentage points lower than in 2010.

“The entire financial industry is adapting to a new environment, which in turn is changing our relationships with stakeholders, whether they are clients, regulators, shareholders or employees,” says Citi chief executive Michael Corbat.

“At the same time, we face continued headwinds caused by uneven economic growth globally. The US housing market hasn’t recovered and unemployment remains high. Despite these challenges, Citi is consistently profitable. We have been reducing expenses and growing revenues in all of our core businesses. We increased our consumer lending and deposits, and we saw solid performance throughout our institutional businesses. [Meanwhile], we continue to reduce non-core assets and increase our capital strength.”

Looking ahead, Citi is keen to focus on the most profitable products and markets while it deals with its more problematic businesses, grouped under the Citi Holdings entity.

“We are focused on partnering with our clients through our core businesses, particularly those in faster-growing markets where our footprint is a competitive advantage,” says Mr Corbat. “We will continue to minimise the drag from Citi Holdings as we wind it down, and we will be vigilant about how we allocate our resources, from investments to capital to our people, for the benefit of our clients.”

Venezuela

BBVA Provincial

Venezuela may not be the easiest of markets in which to operate, but it has certainly been highly profitable for BBVA Provincial. The bank closed 2011 with an impressive 85% net profit growth and a return on equity of 48%. It also increased its assets by 48% and its Tier 1 capital by 29%, while steadily reducing its cost-to-income ratio to 31% and bringing non-performing loans comfortably under 1%.

New technology meant that the security of credit and debit card transactions was improved, something that reduced fraud by 46%. Improved processes also allowed for faster loan approval times and prompt communication with clients. Furthermore, the bank created online and mobile phone banking facilities and a new online payments platform accessible even to non-customers. Corporate customers were also offered a new electronic channel that simplified procedures to request letters of credit for their foreign trades.

“BBVA Provincial has focused its efforts on improving the quality of its services to customers, generating value to shareholders and increasing its productivity and efficiency levels [thanks to] product innovations and technological development,” says chief executive Pedro Rodriguez Serrano.

The bank is proud of the large expansion of its loan portfolio, which last year grew by almost 48%, supported by consumer loans and, in particular, by the bank’s commitment to the small and medium-sized businesses. Loans to small corporate clients showed particularly impressive growth in 2011 of 53%.

“The bank’s financial results consolidate our leadership as the most profitable bank in Venezuela, supported by a large growth of loan portfolio, mainly on products for consumption as auto loans, credit cards and commercial loans. Keeping a healthy growth represents one of the major challenges for the institution,” says Mr Serrano.

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter