The Banker Awards 2012 – Asia-Pacific

Asia-Pacific

DBS

Piyush Gupta, CEO, DBS Group

Singaporean bank DBS has been growing steadily over the past year and building on its vision to create a bank that has a footprint across the whole of Asia.

Its gradual emergence as a serious player in Asia comes at a time when the financial crisis and the state of the global economy has forced many international players to reconsider their strategies for the region.

And DBS’s expansion in Asia also comes at a time when the future growth prospects of the region are increasingly being recognised. Over the past year, DBS has continued to position itself to take advantage of that future growth.

Commenting on the challenges of the global economy, DBS Group CEO Piyush Gupta says: “While we need to be vigilant, there are opportunities for the taking. For example, by being nimble, we’ve been able to gain sizable market share in the [offshore renminbi] space [in 2011] and in the Asian fixed-income space this year.”

In 2011, DBS achieved record profits of S$3.04bn ($2.48bn), the first bank in Singapore to pass the S$3bn mark. Building on this solid performance, its earnings for the first half of 2012 were S$1.74bn, continuing the steady and solid performance of its quarterly results.

“Compared to many Western banks, Asian banks also have relatively stronger capital and liquidity positions. This positions us well to gain new customers as well as support companies impacted by retreating Western banks. We’re pleased to have been able to deliver 11 quarters of consistently strong performance as we continue to execute against strategy to be a leading Asian bank,” says Mr Gupta.

DBS’s regional expansion will see it focus upon growing its presence in three regions: Greater China, south-east Asia and south Asia.

The bank intends to use Hong Kong as its anchor for its business in Greater China, and it has also identified a number of other key markets in establishing its pan-Asian footprint. Indonesia has been recognised as a bright spot in the region because of the strength of its domestic economy, and in April 2012 DBS made a bid to tap into that potential by making an offer for the Indonesia’s Danamon Bank. At the time of writing, this deal was still subject to regulatory approval.

Afghanistan

Afghanistan International Bank

Afghanistan continues to be one of the most difficult and challenging markets in which to operate, and any bank located in the country is faced with uncertain economic, political and security conditions. In such harsh conditions, it is an achievement just to be profitable – and that is something that Afghanistan International Bank (AIB) has been able to do.

Khalilullah Sediq, CEO of AIB, says that the challenging conditions have put the bank’s capital and liquidity under pressure, but “despite this, AIB put in an excellent performance in 2011 and continues to adhere to strong risk management policies, a capital adequacy ratio of 22%, and an 85% liquidity ratio”.

In 2011, AIB was able to grow its deposit base, as well as its number of customers. Its corporate clients increased from 8200 to 12,500, while individual customers increased from 26,500 to 51,300.

The most noticeable change to AIB in the past year was the acquisition of Standard Chartered’s business in Afghanistan, which the international bank sold off as it withdrew from the country in 2012. AIB began discussions with Standard Chartered in late 2011 to acquire its customer deposits, and the agreement was signed between the two banks in February 2012.

International standards have been a focus for AIB, and Mr Sediq is keen to point out that the bank complies with international best practices in governance, especially with regards to anti-money laundering.

Commenting on AIB’s plans for the future, Mr Sediq explains that the bank made a strategic plan from 2011 to 2014.

“Specifically we are in the process of an expansion of the bank’s nationwide network, having opened new branches in Kabul as well as other key locations in the outlying provinces,” he says. “We also plan to launch new products and services to expand our existing customer base and new customer acquisition initiatives focused especially on small and medium-sized businesses.”

Australia

Westpac

Banks around the world are operating in an uncertain global economic environment, and Australia has been no exception. And so balance sheet strength has been a key priority for Westpac.

Gail Kelly, CEO of Westpac Banking Corporation, says of the bank’s achievements in the past year: “In an environment of lower growth, increased regulatory requirements and continuing global uncertainties we have significantly changed our business during the past year. This has included materially strengthening our balance sheet, with stronger capital, an improved funding mix and a further uplift in liquid assets. At the same time, we have made good progress, delivering on our strategy of deepening customer relationships and achieving good returns on our investments, including in Asia and wealth management.”

Westpac has pursued a multi-brand approach, and one of these brands is the Bank of Melbourne, which was launched in July 2011 and is a rebranding of the St George branches in Victoria that Westpac acquired from St George in 2008.

A regional bank in the state of Victoria, the Bank of Melbourne describes itself as “a Victorian bank for Victorians”, and its progress has been significant. In July 2012, a year since its launch, 50,000 new customers had joined up, the branch network was doubled, 300 new jobs were created in the state, and the number of products the customers held increased, as did the amount of deposits increasing by more than 30%.

Looking ahead to 2013, Ms Kelly says: “In the period ahead we expect conditions to remain challenging and so remaining strong is a priority. Nevertheless, we will continue to reorient our business to higher growth and return sectors, and further build on the good work achieved on deepening relationships and simplifying our products and processes.”

Bangladesh

Standard Chartered Bank Bangladesh

As the oldest and largest foreign bank in Bangladesh, Standard Chartered has been able to build a strong wholesale and consumer banking business.

However, the past year has not been easy for the bank, and Jim McCabe, CEO of Standard Chartered Bank Bangladesh, says that the biggest challenge for the bank has been a lack of market liquidity, which resulted in higher lending rates.

“We were able to turn this liquidity challenge to our advantage,” says Mr McCabe, adding that the bank focused on customer service and its product offerings for the high-value customer segment. “The bank performed well through the liquidity crisis. It was open for business, much to the delight of our retail customers and corporate clients,” he adds.

The bank has also been involved in a number of high-level projects in the last year. Standard Chartered Bank Bangladesh was a joint advisor to the Bangladesh government in obtaining its debut sovereign credit rating from Standard & Poor’s. And the bank was also a lead arranger for the syndicated financing for the licence renewal of the telecom services providers Axiata and Orascom.

Standard Chartered Bank Bangladesh was also involved in a number of firsts for the market: it provided the first ever interest collar hedging solution, and it also provided the first ever interest rate swap with a Bangladeshi government entity.

Mr McCabe says of his expectations for the coming year: “Next year is expected to be a challenging year for the banking industry. The consumer bank intends to pursue its existing high-value segment focus. Small and medium-sized enterprise opportunities will lie in trade and working capital and increasing the medium-sized enterprise customer base. With the country moving into large infrastructure projects, the corporate bank will be harnessing relationships to garner deals with its expertise in structured finance, independent power project financing, syndications, cash and trade.”

Brunei

Baiduri Bank

Over the past year, Baiduri Bank has worked on improving the performance of the whole bank, and has emerged as a strong all-rounder.

The bank is operating in a market that has been subject to a number of regulatory restrictions, and this has been one of the major challenges that the bank has had to grapple with in 2012.

Despite this, Baiduri has been able to achieve solid results and growth in sales of its mortgages of 5.28%, from Br$26.6m ($21.77m) in 2010 to Br$28m in 2011.

Pierre Imhof, CEO of Baiduri Bank, explains that the new regulations tightened policies for personal loans and credit cards, which resulted in the slowing down of the domestic retail sector, which in turn affected the banking industry. “Despite this, Baiduri Bank Group was still able to achieve good operating results, primarily due to a well-balanced set of core businesses: retail banking, corporate banking and consumer financing,” says Mr Imhof.  

The bank has worked on improving a number of operational areas. Aside from growth in its Tier 1 capital and a reduction in its non-performing loans to 1.17%, Baiduri has worked on creating synergies between its business units and has refined its marketing strategy. The bank has also explored new avenues in consumer finance, mortgages, corporate project financing, and expanding wealth management products.

“We see opportunities arising from the country’s economic diversification programme,” says Mr Imhof. “In line with our corporate objective to nurture Brunei’s SMEs [small and medium-sized enterprises], we intend to develop further our SME banking facilities to help aspiring SMEs reap the business opportunities generated, and to participate in the supply chain process.”

In the past year, Baiduri has also paid attention to training its staff, and has offered courses in financial planning and has encouraged its employees to hold professional financial and consultancy qualifications.

Cambodia

Cambodian Public Bank

Cambodian Public Bank, also known as Campu Bank, has improved in a number of areas of its operations over the past year, and its financial performance has been strong.

The bank’s pre-tax profits increased by 58.9%, from $18.47m in 2010 to $29.35m in 2011, which Campu’s senior management put down to the improvements in its lending business, higher non-interest income and more efficient fund management.

The bank also reached a milestone this year when its total assets passed the $1bn mark. Added to this, its return on equity improved from 7.3% in 2010 to 11.1% in 2011, and its cost-to-income ratio of 27.5% put it ahead of its peers in the Cambodian market.

Over the past year, Campu Bank has grown its across its lending, deposit-taking and cards businesses. At the end of 2011, the bank’s outstanding loans were $59.4m, which, an improvement on the 2007 figure of $360.3m. Over the same period, deposits have grown from $306.6m to $770.9m, a rise of 152.3%.

Aside from lending and deposits, Campu Bank has worked toward diversifying its income, and in 2011 the bank recorded a 14.7% growth in non-interest income, which was mainly attributed to trade finance and loan-processing fees, and also remittances. The bank has also been expanding its branch network and received approval to open more banks in 2012.

Campu Bank has also been working on ways to improve its interaction with customers. It has, for example, set itself targets in its branches to make sure that customers are served within five minutes.

Campu Bank aims to be a one-stop shop, which has been made possible through its wholly owned subsidiary Campu Securities, which offers securities underwriting, dealing and trading, while another subsidiary, Campu Lonpac Insurance, provides general insurance services.

The bank has also recently launched new products which target different customer segments. For example, Campu Bank launched the Gold Investment Account, which gives customers an alternative in their portfolio by allowing them to invest in gold, a first in Cambodia.

Also, Campu Bank has added to its cards portfolio by issuing Platinum MasterCard and Visa cards for the high-end segment in Cambodia.

China

Bank of China

Much attention has been paid to the state of the global economy, which includes the slowdown in China and whether the country is heading for a ‘hard landing’. The figures for Bank of China, however, show that while the growth in profits had slowed, the bank has still been able to post strong results.

In 2011, the bank’s net profits were Rmb124.2bn ($19.91bn), an 18.93% increase from 2010’s figure of Rmb104.4bn. While a growth rate of 18.93% is impressive, particularly in a difficult economic climate, it was down from 2010 when the bank was able to grow its profits by 29.2%.

Bank of China president Li Lihui says that the bank’s profitability in 2011 was driven primarily by the increases in net interest income and non-interest income, asset quality stabilisation and better operating efficiency. “The bank steadily expanded the scale of its assets and liabilities while continually optimising its business structure,” says Mr Li.

“Bank of China gave priority to highly profitable industries, customers and projects, and the proportion of loans to small enterprises went up. The bank flexibly adjusted the scale and structure of its bond investments and constantly improved the profitability of its investment portfolios,” says Mr Li.

Aside from the developments within the bank itself, the Bank of China has also become more international. In 2011, the bank was recognised as a global systemically important financial institution by the G-20 Financial Stability Board, which was a significant step for a Chinese bank.

Over the past year, the bank has also quickened the pace of expanding its global network and has worked toward transforming its overseas businesses. In 2011, it set up 12 new overseas outlets and now its international network covers Hong Kong, Macao, Taiwan and 32 other countries and regions. In 2011, the assets and pre-tax profits of Bank of China’s overseas operations accounted for 22.4% and 21.2%, respectively, of the banking group.

Hong Kong

HSBC

Hong Kong’s proximity to China and the internationalisation of the renminbi have been two of the major opportunities that banks in Hong Kong have been seeking to take advantage of in the past year.

HSBC has continued with its high-profile role in the renminbi internationalisation through renminbi bond issues in the currency. And in the retail banking space, the bank launched a dual currency card for customers who travel frequently between Hong Kong and the Chinese mainland.

Anita Fung, CEO of HSBC Hong Kong, says: “The continued internationalisation of the renminbi should be of major importance in the world of trade and finance. The currency’s usage in trade settlement is already shaping how business transactions are conducted between China and its trading partners.

“Renminbi is also starting to have an impact as an investment currency, not just in Hong Kong, which remains the largest offshore renminbi hub, but also in other growing financial centres such as London and Singapore. In this regard, HSBC will continue to strengthen its leading position in the internationalisation of the renminbi by leveraging our global network so as to connect our clients to opportunities in China and around the world.”

Aside from the renminbi products, the bank has performed well in other areas. For example, it has seen a rapid increase in the uptake of mobile usage by its corporate customers. It also launched BizConnect, which allows corporate customers who travel overseas to connect with their relationship manager via video conferencing through the lender’s internet banking platform.

In 2011, HSBC also opened four business banking centres and set up a new China corporate team in Hong Kong to service mainland Chinese companies looking to expand internationally.

India

ICICI

Restructuring a balance sheet is not an overnight business and it has taken ICICI three years to complete its strategic goals. During that time the cost of funds has been reduced by increasing the proportion of low-cost stable deposits to more than 40%, and on the asset side there has been a reduction in unsecured retail loans.

The bank’s managing director and CEO, Chanda Kochar, says: “A mixture of improving net interest margins, reducing credit costs and lowering the cost-to-income ratio has finally led to this improvement in return on assets, which has gone up from less than 1% three years ago to more than 1.5% now. We think we can carry on improving and I can clearly see the path to 1.65% or 1.7%.”

On the question of receiving The Banker’s award, Ms Kochar says: “Its clearly a recognition of all the hard work ‘team ICICI’ has put in for many years but it also means we have reached a level from where we have to keep up our standards so it’s also a great responsibility.”

For the year ended March 2012, the bank notched up profits of Rs64.65bn ($1.2bn), which was a 25% increase on the previous year, with assets rising by nearly 17% over the same period. But with a Tier 1 capital adequacy ratio of nearly 13%, the bank has the capacity to keep on growing.

“We have the ability to improve our return on equity by leveraging our equity. We have very high capital adequacy ratios and now that we have done the consolidations on assets and deposits we have the ability to start growing. We expect our domestic business this year to grow by about 20%.”

As well as improving its balance sheet, ICICI has introduced a huge number of initiatives such as launching an app on its Facebook page, improving account portability, and closing the first rupee credit default swap.

Indonesia

Bank Mandiri

Bank Mandiri is a state-owned bank, but has revitalised itself in a way that belies these origins. The bank is now in the second phase of its transformation plan, and in the past year has made progress by putting itself in a good position to be able to take advantage of the developments in the rapidly evolving Indonesian market.
In terms of its financial results, Bank Mandiri performed strongly. In 2011, the bank’s assets had increased by 22.7% to Rp551,000bn ($57.64bn) and net profits had increased by 32.85% from Rp9210bn in 2010 by 32.85% to Rp12,240bn in 2011.

Aside from consistent financial performance, the bank has been working on improving efficiencies and completing a number of initiatives. Bank Mandiri finished its project to install 2500 ATMs, bringing the total to 8996 units and making it the largest ATM network of any bank in Indonesia.

The bank has also been growing in a manner that is reflective of the uptick in the Indonesian economy. But while the strong domestic economy gives rise to optimism about the future, Indonesia is not immune to the gloom about the state in the global economy.

“The EU and US financial conditions affect banks globally,” says Bank Mandiri CEO Zulkifli Zaini. “However, Bank Mandiri’s financial performance until the third quarter of 2012 has shown encouraging development. The development of the national banking system is supported by solid economic conditions in Indonesia. In addition, the country has implemented prudent policies in preparation for the impact of the global crisis.

“We expect Indonesia to grow at 6.5% in 2013. Amid the EU crises, the bank will focus the credit growth on domestic businesses as well as exports to countries other than the US and those in Europe. This is to minimise the potential risk of foreign currency liquidity due to the global crisis.”

Japan

Mizuho Financial Group

Mizuho Financial Group has pushed ahead with its transformation plan and in the past year has made significant progress in making changes to reorganise its structure, create synergies and make changes to its corporate governance.

“We set the course of our management policy to establish a new corporate structure and strengthen corporate governance toward the ‘advanced and integrated group management’,” says Yasuhiro Sato, president and CEO of Mizuho Financial Group.

Back 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.

And now the bank has made further progress with its plans to create one bank. “We signed a memorandum of understanding on the merger between Mizuho Bank and Mizuho Corporate Bank, and implemented the ‘substantive one bank’ structure in April 2012,” says Mr Sato.

It is expected that the merger will be completed by the end of the first half of 2013. The transformation process will be a lengthy one, and not without its challenges. Both Mizuho Bank and Mizuho Corporate Bank will have the task of communicating the changes with their customers, and will have to explain the changes to their products, service and procedures.

Although the project is a significant one, and not without its challenges, it is hoped that it will establish synergies and create a structure that will give the institution a solid foundation for the years ahead.

“Mizuho will be the only financial group in Japan with banks, trust banks and securities companies under one umbrella. Through our One Bank and One Securities Company structure, we will provide an effective and multi-faceted range of financial services directly and speedily to our customers,” says Mr Sato. 

Kazakhstan

Eurasian Bank

With some of the highest gross domestic product growth in the world, and strong business ties with Russia, China and its neighbouring Commonwealth of Independent State countries, things are looking up for Kazakhstan. Much of its banking sector, however, is still in recovery mode following an asset bubble and economic crisis which peaked in 2009. Even in the midst of this varied climate, Eurasian Bank – which recently received injections of equity and the introduction of new management – has staged an impressive growth story.

Net profits were up 991.1% year on year in 2011, while return on equity reached 21% from 2.2% in 2010. Meanwhile, its cost-to-income ratio was reigned in by almost one-third, from 75.7% in 2010 to 52.2% in 2011. Non-performing loans (NPL) were cut from 9.4% to 7.6% over the same period, and now stand well below national sector averages.  

“As a leading bank in the country, the main challenge faced by our bank has been dealing with fast client and transaction growth. We had to redouble our efforts on IT, risk management and operation processes to reduce operational risk and increase our level of service to our customers,” says Michael Eggleton, CEO and chairman of the management board at Eurasian Bank.

The new management team completely restructured the bank’s balance sheet, loan book, cost structure, credit processes and asset liability management. Results included the better use of assets, and 19.8% loan book growth in 2011. Loan quality has improved significantly too, thanks to more active management of NPLs, revamped internal and external loan collection processes, and a strict, centralised, credit evaluation process.

“The targets for next year are simple. We must improve our customer service, increase the network of the bank and reduce staff turnover. Our focus will be building a culture of ‘what is Eurasian Bank’. This effort will be made across all areas and levels of the bank,” says Mr Eggleton.

Kyrgyzstan

Demir Kyrgyz International Bank

Another year and another win for Kyrgyzstan’s Demir Bank, which improved dramatically from last year’s results, posting an annual increase in net profits of 150% for 2011 and boosting both assets and Tier 1 capital. Return on equity, meanwhile, was up 32.7%, while its cost-to-income ratio was pushed down to 58.3%, from 77.1% in 2010, and non-performing loans were cut from 5.1% to 1.6% over the same period.

“The political instability of previous years and the remaining question of entering the Customs Union [of Russia, Belarus and Kazakhstan] affected the economic situation by forcing customers to comparatively decrease their business activity in 2012. But despite all these difficulties, Demir Bank has retained its position in the Kyrgyz banking system and even strengthened it,” says the bank’s general manager, Sevki Sarilar.

One of Demir Bank’s priorities in 2011 was the increase of interest-earning assets as a proportion of its total assets, so lending to reliable corporate and individual customers from various areas of the economy was a key focus. It is already paying off spectacularly – the bank’s corporate and small and medium-sized enterprise loan portfolio increased by 55.6% in the first quarter of 2012 compared with the same period of 2011, while its retail loan portfolio increased by 99.8% in the same period.

The bank also boosted its capabilities in sales, customer care and service, as well as technology and security. These included an expansion in the issuance of international Visa cards, and broadened ATM and point-of-sale terminal network. This paid off in an increase in the bank’s customer base of 39%.

“Demir Bank is a customer-oriented bank. According to its strategic plan, the bank is going to increase branch numbers, launch cash-in payment kiosks, MasterCard, SMS-notification for transactions, e-commerce, chip card issuance and modernise internet banking by increasing its possibilities and security,” says Mr Sarilar.

Laos

ANZ Laos

ANZ’s operation in Laos has started to turn in a profit for the first time since it entered the Laos market in 2007. The bank’s investment is now beginning to pay off handsomely: in 2011, ANZ Laos reported a net profit of K1.5bn ($190,000), an increase of 111.64% on the year before.

One area of investment for ANZ Laos has been in training local staff. Laos, with an underdeveloped financial services industry and a relatively young workforce, did not have a talent pool with banking skills that ANZ Laos could easily tap into.

Instead, the bank has committed resources to developing the banking skills of the local staff. This has included training courses in credit analysis, customer centricity, anti-money laundering compliance, sales, leadership, fraud awareness and IT.

ANZ Laos has also invested in the agribusiness sector over the past year, and as the bank develops its domestic presence it is being faced with a number of challenges. “Most trade and commerce in Laos still takes place on a cash basis given that neighbouring countries are its main trading partners and convincing businesses to use banking products and services has been a challenge. Also, with almost 30 banks in Laos, a couple of them new, competition is getting stronger and margins are compressing as more players seek a share of the pie,” says Lathief Abdul, CEO of ANZ Laos.

“More and more regional players and multinational companies are entering the market, providing greater opportunities for banks such as ANZ, which has a global presence and regional connectivity. We have an edge over other banks in terms of our product capabilities, particularly in trade finance and cash management. So deeper penetration and increased wallet share from local corporates is a major opportunity in the year ahead,” says Mr Abdul.

Macao

ICBC (Macau)

Unlike many economies around the world in 2011, Macao was still experiencing fast economic growth and its booming economy stimulated consumption as well as investment.

The optimism in the Macao market was also reflected in ICBC (Macau)’s figures. The bank’s profits were up 39%, increasing from 641m patacas ($80.28m) in 2010 to 898m patacas in 2011. This was a steady growth on 2010’s figure, which was a 40% increase from 459m patacas in 2009.

The bank has been busy in a number of areas over the past year. It arranged a number of syndicated loans to support some major enterprises in Macao. The bank also expanded its branch network and developed its renminbi business as well as its precious metal operations.

While things have been going well in the domestic market, the situation in the global economy has been more challenging for the bank. Zhu Xiaoping, chairman of the board of ICBC (Macau), says: “Due to the pending European debt crisis and uncertainty of global economic recovery, the interest rate, foreign exchange rate as well as asset prices keep fluctuating and this brings a lot of instability factors to the bank’s operation.”

This has been one of the major challenges for the bank, but the environment in Macao also provides many opportunities. Mr Zhu says that many large projects and investments will be launched in the next year, which will help Macao’s economy to continue to thrive, as well as giving opportunities for the bank to capture local business.

As well as the opportunities that will come from the growing Chinese economy, and the internationalisation of the renminbi, Mr Zhu points to other opportunities. “The deepening co-operation in the Zhujiang River Delta area [of China], especially development in the Hengqin New Area – an island neighbouring Macao – will all bring great opportunities to the bank’s trade finance and cross-border business,” he says.  

Malaysia

CIMB Group

Malaysia-based CIMB has built on its regional expansion in the past year that has boosted its position as a universal bank for south-east Asia.

The bank has made a series of acquisitions that has seen it grow from a Malaysian investment bank into a regional universal bank, with total assets rising from $30.3bn in 2005 to $101.3bn in 2012. The market capitalisation of the bank over the same period, has also risen from about $1.4bn to about $18.7bn. The bank’s growth has helped put Malaysia on the map as the springboard into the Association of South-east Asian Nations (Asean) region.

One of the bank’s strengths has been its shareholder value creation, and since June 2005, when the bank became a universal bank, until the end of 2011, the bank has delivered a shareholder return of 290%, an average annual return of 52.7%.

In the past year, the bank has purchased most of the Asia-Pacific cash equities and associated investment banking business from the UK’s Royal Bank of Scotland. CIMB is also in the process of buying a majority stake in the Philippines Bank of Commerce.

The acquisitions, which were scheduled to be completed by the end of 2012, set CIMB up as a large Asia-Pacific investment bank and enable it to expand its retail branch network in Asean’s major economies: Malaysia, Indonesia, Singapore, Thailand and the Philippines.

This regional expansion has required investment in CIMB’s systems. The group has set aside RM2.1bn (686.2m) from 2010 to 2015 to integrate its systems and processes for regional operations. The largest part of this has been the implementation of the 1Platform, a core-banking platform that is the largest project in CIMB’s history and will underpin the bank’s regional operations.

The regional expansion into Asean has been a core focus of CIMB and to assist it with this, the CIMB Group established the CIMB Asean Research Institute in 2011, to support and research the process of Asean economic integration.
CIMB aims to capture the opportunities from the economic growth in the Asean region, and has positioned itself to take advantage of the economic co-operation that is expected to strengthen over the next few years.

Mongolia

Golomt Bank

Managing the fast pace of economic growth continues to be one of the main challenges facing domestic banks in Mongolia. Aside from making key strategic decisions to manage such rapid growth, Golomt Bank has also been busy in the past year on projects that set the bank up for the future.

“Mongolia’s economy grew 17.13% in 2011, and Golomt Bank has continued its progressive growth in terms of assets, capital, deposits, loans and post-tax profits while retaining the strongest financial structure in the Mongolian banking system with the lowest non-performing loan ratio of 2%, the highest liquidity of 38.9%, and the lowest loan-to-deposit ratio of 67.6%,” says John Finigan, CEO of Golomt Bank.

Added to this, the bank has augmented its Tier 1 and Tier 2 capital base through relationships with Credit Suisse, Abu Dhabi Investment Council, Swiss-MO Investment and Trafigura Beheer.

The bank has grown its deposit base and has also been active in investment banking. Golomt Bank acted as the sole arranger and provider of a $21.6m credit agreement with Mongolia’s national aviation carrier and was a local financial advisor for the initial public offering of state-owned mining company Erdenes Tavan Tolgoi.

Golomt Bank has also taken action to improve its retail banking services. “The bank continues to pioneer innovation in the Mongolian banking system, introducing the first mobile banking apps and the first self-service banking modules,” says Mr Finigan.

In addition, the bank upgraded its internet banking service for both individual and corporate customers and also expanded its branch and ATM network. On top of this, the bank developed a new hub-branch business model and established a dedicated ‘business centre’ for small and medium-sized enterprises.

The bank also established Golomt Securities, a broker subsidiary company, and was granted securities underwriting and brokerage licences.

Nepal

Standard Chartered Bank Nepal

Nepal is still very much an emerging market and the actions of Standard Chartered Bank Nepal in the past year have improved the working lives of its staff and also raised the level of banking services in the country as a whole.

The bank completed a number of specialised structure trade finance deals in 2012. These included a $6m term finance deal where the future credit card receivables of one client were used to channel cashflow through an escrow account, which was maintained by the bank.

As well as trade finance deals, the bank increased its loan portfolio by 15%, while also maintaining a stable deposit base. And the bank’s staff has noticed a number of changes in the past year. Standard Chartered Bank Nepal invested 3.32 days per staff member for various learning and development programmes, and it is also the only bank in Nepal to introduce a five-day working week for its employees.

Joseph Silvanus, CEO of Standard Chartered Bank Nepal, says of the unique characteristics of the banking market in which his bank operates: “Nepal is increasingly being coupled with the world; recent economic trends have clearly borne out these links. This year, our main challenge is managing these dependencies while being open for business and remaining relevant to the growing domestic market requirements.”

The bank has now identified a number of opportunities for the year ahead. “Nepal has three big growth sectors: hydropower, agriculture and small and medium-sized enterprises are all seeing increased engagement from international investors, and local financing needs are growing. We are well positioned to [operate] in this space,” says Mr Silvanus.

New Zealand

ANZ New Zealand

ANZ has been building on its regional strategy over the past year, and its business in New Zealand has been well positioned to assist domestic companies with their international expansion, as well as bringing international companies into New Zealand.

The bank has developed a number of cross-border products, and was to be one of the first outside China to settle trade payments in renminbi. And in terms of foreign investment flows, ANZ New Zealand has been a major player in terms of being a lead arranger of bond issues, syndications and structured finance.

The bank has also been able to utilise its regional network in Asia and has helped New Zealand companies expanding in China, for example, through renminbi lending to dairy company Fonterra and through transaction banking to New Zealand’s major exporters to China.

ANZ New Zealand has also introduced a number of measures to help its domestic customers. The bank doubled its farm start-up package to young farmers in order to assist New Zealand’s ‘lost generation’ of farmers who cannot raise the capital to start their farming career.

Commenting on other developments at the bank in the past year, ANZ New Zealand CEO David Hisco says: “The major challenge we set ourselves was to progressively bring together our two bank brands, ANZ and The National Bank, culminating in the decision to combine them as ANZ. We have since brought both banks onto a single IT platform – one of the biggest IT projects in New Zealand’s history. Crucially, we were able to do this with minimal disruption to customers. We now have a new focus and scale to grow our market share as New Zealand’s best bank.”

Pakistan

UBL

One of the features of Pakistan’s banking landscape is the vast number of unbanked people residing in the country. While Pakistan’s banks are some of the most profitable in the world, approximately only 10% of the population – fewer than 20 million people – have bank accounts. The remaining 90% presents an opportunity for banks in the country, and this is the segment that UBL has been targeting with its Omni branchless banking service.

“The greatest opportunities are in the bank’s new Omni branchless banking business, which has been recognised in Pakistan and globally and has the potential to transform the country’s banking landscape with financial inclusion of the masses,” says Atif Bokhari, UBL’s president and CEO.

With Omni, UBL aims to attract the unbanked population through a network of retail business agents, offering them mobile financial services, such as cash deposits and withdrawals, cash transfers, bill payments and the purchase of airtime vouchers.

The bank has worked with the government and multilateral agencies, which has led to Omni being used for 3.5 million cash disbursement transactions, and has provided services to 1 million flood victims, 44,000 World Food Programme beneficiaries and 150,000 recipients of the Benazir Income Support Programme.

The Omni service was given an additional boost in January 2011 when the Bill and Melinda Gates Foundation gave UBL a grant of $6.9m to allow the service to expand.

Aside from these developments, UBL has been operating in a difficult environment. “The main challenge has been the economic slowdown in our domestic international markets. As a result, managing non-performing loans has been challenging. The worst is behind us now and the bank’s results in the past two years, and this award, are a testament to this. UBL is on a very sound and secure footing with strong capital levels and a healthy dividend payout,” says Mr Bokhari.

Philippines

Security Bank

Security Bank has emerged as a competitive player in the Philippines and in the past year has been involved in the significant acquisition of consumer and savings specialist Premiere Development Bank, and has also been active in its capital markets business. The bank is operating in a market that is entering a phase of infrastructure development, and it is seeking to keep pace with these investments in the Philippines.

Security Bank’s loan growth in 2011 was 24%, as the bank focused on its corporate and small and medium-enterprise customers, and the loans went to the infrastructure, energy, retail, real-estate and mining sectors.

The bank in the last year took a leading position in the equity and debt capital markets and was involved in a number of landmark big-ticket deals in the Philippines.

It was a joint deal manager for the Republic of the Philippines’ 323bn pesos ($7.85bn) bond swap, which was the government’s largest bond swap transaction at that time. It allowed the government to smooth out its debt maturity profile, meaning it was able to channel funds that were previously earmarked for debt servicing into infrastructure projects. The 10- to 20-year bonds that were issued served as the benchmarks for long-term financing for the government’s public-private partnerships infrastructure programme.

Security Bank was involved in a number of other key deals, such as the 16bn pesos secondary offerings of San Miguel Corporation. The bank was also involved in a $220m 12-year mezzanine loan facility for Team Energy, as well as 11.5bn pesos and 11bn pesos corporate notes, respectively, of MTD Manila Expressways and South Luzon Tollways Corporation.
Aside from being involved in the active capital markets in the Philippines, Security Bank focused on other areas. For example, the bank rolled out new treasury hedge products to address the heightened market volatility, as well as a range of foreign exchange products.

Singapore

OCBC Bank

Over the past 12 months, OCBC Bank has made significant improvements to its products and services, in the process making the lives of its customers easier.

The Singaporean bank launched ‘Frank by OCBC’, a banking brand that focuses on the ‘generation Y’, or youth market. The products, branches and whole user experience have been designed with the needs of this customer segment in mind.

OCBC has also revamped its online banking platform, introduced a paperless account opening process in its branches, and reduced the time it takes to disburse loans to customers. With the paperless account opening, which was launched in Singapore in November 2011, opening a bank account is now, on average, twice as fast as it used to be. These steps, as well as simplifying the language used in written communications, have improved the banking experience of Singaporean banking customers.

Samuel Tsien, CEO of OCBC Bank, points to the challenges in the operating environment, particularly unemployment in the US, the European sovereign debt crisis and China’s slowdown, and the impact of more stringent regulation. “Banks in Asia were not unaffected by these global issues but banks with strong customer franchises have been able to better withstand the impact. OCBC, with its deep-rooted presence in commercial banking in Asia, has been able to deliver resilient financial results,” he says.

The bank is now looking beyond its domestic market and is focused on Asian regional growth. “Market developments in the US and Europe over the past 12 months have shifted the focus of attention to Asia. Having undertaken significant economic reforms after the Asian financial crisis of the late-1990s, Asian economies are now in the enviable position of being able to promote and position themselves as the cornerstone of global economic stability. So there are opportunities available to banks and companies operating in Asia,” says Mr Tsien.

South Korea

Hana Bank

Hana Bank has been involved in one of the most significant events in the history of the South Korean banking industry in the past year: the acquisition of Korea Exchange Bank (KEB). This is part of Hana Bank’s aggressive growth strategy which it hopes will place it in the global top 50 banks by 2015.

In February 2012, Hana Financial Group acquired KEB, putting the bank on a path to creating economies of scale and building out its international network.

Jong Jun Kim, president and CEO of Hana Bank, explains that the merger will give the bank the scale that it needs to be a competitive force among South Korea’s banks. “Hana Bank has always been competitive, but we were a bit small in size.

With this acquisition we can achieve the scale and size to become the second largest bank in Korea in terms of the number of branches, and in terms of assets,” he says.

“Hana and KEB are both excellent banks,” adds Mr Kim, who says that there is not much overlap between them, and the merger will aim to bring the two together and create synergies.

KEB’s traditional strengths have been in foreign exchange and foreign trade, while Hana has built a reputation in private banking and retail banking.

Mr Kim says that because of the uncertainty in the global economy, and also because the banking industry in Korea is in a cycle of low growth and in a low-interest environment, one challenge for the bank is to find ways to improve its profitability.

For now, the bank has no plans to merge the two brands and they will continue to operate two separate banking brands. How exactly the two businesses will be integrated is yet to be decided, but for now Hana has decided to tread sensitively and cautiously in how it handles its new acquisition.

Sri Lanka

Hatton National Bank

In common with markets across the world, the state of the global economy has been a major factor for banks in Sri Lanka. But as Hatton National Bank’s managing director and CEO, Rajendra Theagarajah, points out, the bank has been able to weather these challenges.

Hatton National Bank has focused on four pillars, says Mr Theagarajah, the first of which is “aligning our business strategy with the national vision to fully harness the country’s post-war potential”. The second pillar is the bank’s focus on obtaining an international rating, and the third is bolstering its capital adequacy ratios beyond the regulatory minimum. Hatton has also invested in technology, and the fourth pillar has been to develop a robust electronic banking platform.

Ranee Jayamaha, chairperson of Hatton National Bank, says: “Now that the 2012-14 strategic plan is in motion and being implemented across all business and product segments, Hatton National Bank is well placed to benefit from the immense opportunities that are being created internally by aligning the bank’s strategy with the national vision and participating in infrastructure and other development activities in the country. Hatton National Bank also sees potential in capturing cross-border opportunities in different business segments.”

Hatton National Bank has also been notable for identifying the demand for sharia-complaint products and services, and in the first quarter of 2012 it ventured into Islamic banking with the launch of HNB Al Najah. The Islamic banking customers are served through a dedicated unit which offers a range of products.

Over the past year, the banking industry in Sri Lanka has seen a growth in credit, though the growth in deposits has been relatively low because of the low-interest environment. To address this gap, Hatton National Bank initiated a capital-raising plan, which included raising $75m from China Development Bank and DEG Germany.

Taiwan

Chinatrust Commercial Bank

In such a crowded and overbanked marketplace, it is often hard to distinguish between the banks in Taiwan. However, Chinatrust Commercial Bank has performed well over the past year, producing solid financial results and building on its strategy for expansion.

Between 2010 and 2011, the bank’s profits rose by 22.58% from NT$16.2bn ($558m) to NT$19.9bn, an impressive figure in such a competitive market. On top of this, the bank’s credit rating from Standard & Poor’s and Taiwan Ratings was increased to ‘A’ and ‘twAA+’, respectively.

The bank has been operating in a difficult environment in Taiwan. Chinatrust CEO James Chen explains: “Operating in a low-interest-rate environment, more stringent regulations imposed on product offerings and fierce competition in matured domestic market were the main challenges we faced, which restricted Chinatrust from speedy revenue growth to a certain extent.”

Aside from competing in the tough domestic market, Chinatrust has been continuing with its expansion. In April 2012, it opened a branch in Shanghai, which it intends to use to build its renminbi business.

“With the establishment of the cross-strait currency settlement mechanism, we expect it will bring in tremendous renminbi business opportunities, including renminbi deposits, loans, direct remittance and wealth management products, which will further benefit our retail banking and institutional banking businesses,” says Mr Chen.

“We also see great opportunity in high-growth Asian markets, especially the Association of South-east Asian Nations, and will expand in this region to pursue higher profits and greater customer base,” adds Mr Chen.

Aside from the opportunities of the renminbi business, Chinatrust has also set its sights on breaking into the Indian market and has set up a second branch there. The bank also launched its private bank offshore in Hong Kong and Singapore in April 2012.

Thailand

Siam Commercial Bank

Siam Commercial Bank (SCB) has performed consistently across a number of areas in the past year, delivering solid financial results. In 2011 it increased its net profits by 28.9%, from Bt24.2bn ($788.7m) to Bt31.2bn, and in the first half of 2012 its profits were already Bt20.4bn.

These results are particularly significant because of the severe flooding that hit Thailand at the end of 2011 and demonstrate how the bank – and the country’s economy – was able to successfully bounce back from this natural disaster.

“We faced three major challenges in the past year: managing the impact on our customers from the worst floods in Thailand for more than 50 years; navigating through the ongoing fallout from a deteriorating global macroeconomic environment; and sustaining high loan growth in the relatively tight liquidity conditions. Yet, as we end the year, we are poised to report the best financial results in our history,” SCB’s senior management said in a statement.

Looking ahead, the bank sees the greatest opportunities in gaining market share in attractive customer sub-segments within retail and the small and medium-enterprise (SME) sector. The bank is concentrating on building a more cost-efficient and scalable operating platform, and enhancing existing human resources programmes to ensure that it will attract, retain and develop the best talent pool in the industry.

In wholesale banking, SCB has put more emphasis on capturing-fee based income in project finance, investment banking, cash management and foreign exchange. And in SME banking, the bank launched a new business model to focus on the smaller end of the SME segment. In terms of retail banking the bank has been dominant in mutual funds, bancassurance and mortgages. Over the medium term, it aims to have the largest auto loans portfolio.

Another avenue for the bank to increase the range of its products has been through the acquisition of SCB Life Assurance, which it acquired in the first quarter of 2011. SCB bought an additional 47.3% stake in SCB Life Assurance and increased its total holding to 94.6%. This is part of SCB’s strategy to tap into the Thai life insurance industry, which it has identified as still having the potential for substantial growth.

Turkmenistan

Turkmen Vnesheconombank

Rigidly controlled and secretive as it may be, gas-rich Turkmenistan has enjoyed strong growth in recent years, with an expansion in gross domestic product of about 10% in 2011, and 11.1% as of the end of September this year. The country’s banking sector is predominantly state-owned and state-directed, but within these constraints, Turkmen Vnesheconombank outperformed its peers, drastically improving performance and winning this year’s award for Bank of the Year in Turkmenistan.

The bank reported a year-on-year increase in net profits of 185.2% for 2011, while Tier 1 capital was up 113.5%, and assets were increased by 185%. At the same time, it cut its cost-to-income ratio to 32% from 42% in 2010, and improved return on equity. Customer numbers were also increased by 15%.

“Valuing our customers, we bring the utmost efforts to improving our business up to the best international standards, best practices and expertise. Our main focus was directed towards the real sectors of the economy, through successful diversification and the integration of businesses. This was due, first of all, to the increasing investment attractiveness in Turkmenistan as a result of economic and legal stability,” says a spokesperson for the bank.

A major investment focus was the deployment of a new automated banking system, an ambitious project for the Turkmenistani market designed to improve the quality of customer services, maximise operating efficiency, and allow the introduction of electronic banking transactions.

The bank also concentrated on enhancing its activities in global financial markets, with a focus on transparency and reliability through the introduction of a new system of financial reporting in accordance with international, rather than local, standards.

Future plans include following a development programme for the banking system unveiled by Turkmenistan’s president.

“The bank is planning to continue providing integrated product solutions for all types of customers, and implementing its function as an agent of the government of Turkmenistan in international financial markets,” says the spokesperson.

“Transparency, publicity and openness are key conditions for a successful business. We are sure that the banking sector can expect stable growth.”

Uzbekistan

Microkredit Bank

It remains state-owned, significantly underdeveloped and in need of reform, but the Uzbek banking sector is on steadier ground than it has been in years past. Increased capital requirements for new commercial banks have strengthened privately owned institutions, while the state-owned firms have seen their capital replenished by the state.

After a difficult couple of years, Microkredit Bank is back in growth mode; net profits were up 8.3% year on year for 2011, while assets were boosted by 18.1% and the bank continued to improve its Tier 1 capital.

The bank was established in 2006 to focus on small business, private entrepreneurship and farming development as well improving access to microfinance services for Uzbekistan’s rural population, and this remit continued to guide its operations in 2011.

As well as providing preferential microfinance services, the bank offers a range of corporate and retail services, and a total of UZS214.6bn ($109.3m) in loans was extended to finance corporate projects in 2011, which exceed the previous year figure by 45%.

Indeed, since the onset of the financial crisis, the loans that Microkredit has allocated to small businesses and private entrepreneurs has resulted in the creation of about 425,000 new jobs, the bank says. And its corporate client portfolio is growing, now numbering about 18,000 commercial entities, an increase of 8% from 2011.

This year has seen a focus on Uzbeki family units, including renewed concentration on widening the available spectrum of services provided by the bank, a drive to improve the efficiency of its microfinance services, and job creation. It have also held educational events focused on entrepreneurship, launched a best business award and unveiled a package of products and services including financial support for youth study, computer literacy and foreign language learning, microcredits for households and savings deposit accounts with high interest rates.

Vietnam

Saigon-Hanoi Bank

Saigon-Hanoi Bank (SHB) has made a significant domestic acquisition this year and has built on its plans for regional expansion.

Its most significant event in the past year was the acquisition of Habubank, which has helped SHB to expand it customer base and network to become one of the largest banks in Vietnam. Through this acquisition, the bank’s customer base has doubled and the network of the combined entity means that SHB has a presence in all 60 cities and provinces in Vietnam. The shareholders of SHB approved the acquisition in May 2012, and the bank has had its work cut out managing the merger process.

It was this acquisition that provided the greatest challenge for SHB in the past year, according to Nguyen Van Le, the bank’s CEO. “These challenges came from the requirements to stabilise the business of the post-merger bank, while the organisational structure, human resources, IT, business processes and procedures, and corporate culture of Habubank are basically different from SHB,” says Mr Nguyen.

The bank has had to face some tough competition in the domestic Vietnamese market for individual and small and medium-sized enterprise customers, and through the acquisition of Habubank, SHB has the potential to be a major domestic player.

And looking beyond the local domestic market, SHB has also been working on building a regional network. In the past year, the bank has opened branches in Cambodia and Laos, and is planning to establish a presence in Myanmar. The rest of south-east Asia is also on SHB’s radar, as that is where many of its customers are living and investing.

Mr Nguyen explains that SHB’s overseas network expansion will continue. “SHB has a plan to serve a significant number of Vietnamese investors seeking for business opportunities in Laos and Cambodia, which will be future markets of the bank in the coming time,” he says.