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Southeast Asia's Best Banks 2021
For banks in the Asia-Pacific region (APAC), the onslaught of Covid-19 can perhaps best be characterized as an unprecedented externality that has served to expose—in stark relief—a twin-pronged dynamic of transformation and consolidation that had been in place before the pandemic emerged.
That dynamic gained momentum thanks to brutal economic contraction, shrinking margins, savage competition and crimped return on equity (ROE). It represents a swift acceleration of forces that had been steadily building prior to the pandemic, characterized by rapidly shifting customer expectations and behavior and hammered home at great speed in the face of lockdowns, social distancing and work insecurity.
Banks in APAC must now work harder for ROE, prompting many to focus on areas that have been relatively ring-fenced from the effects of the pandemic, such as investment banking, wealth management, high-end advisory services and insurance. Many have sought positive carry by moving down the credit curve and into higher-yielding segments such as project finance and unsecured lending.
Traditional incumbent banks might stare with fear at the onslaught of fintech and the competition it presents to traditional business models. In response, their only viable option has been to embrace this technological revolution, in many cases by investing in the upstart competition.
In Southeast Asia,
DBS, Global Finance’s Best Bank in Singapore, managed to increase operating profit by 2% in 2020, with the 8.4 billion Singapore dollar ($6.3 billion) total a record for income, demonstrating the resilience of its franchise against a plethora of headwinds, including low interest rates. The bank reaped the rewards of more than eight years in digital investment, enabling it to transition to new business modus operandi thanks to a stack of modern technology including use of the cloud, deep data infrastructure, artificial intelligence and machine learning.
The bank continues to hit high scores in sustainability, featured on the Dow Jones Sustainability Index. DBS also ranks in the top global quartile on the Bloomberg Gender-Equality Index, both for the fourth consecutive year.
uab Bank in Myanmar has achieved a lot in the 11-odd years since its founding. The bank has achieved a somewhat staggering 242% compound annual growth rate of its profit before tax over the past five years, kept a lid on NPLs of just 5% (some banks in Myanmar are sitting on a 50% NPL rate) and enjoyed a highly competitive cost-to-income ratio of just over 50%. UAB was the first bank in the country to step up during the start of the pandemic to offer relief packages to borrowers.
Best Banks 2021 by Global Finance
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Indonesia’s BCA (Bank Central Asia) is positioned well ahead of its domestic competition in terms of sheer scale, asset quality and arguably corporate ambition. The bank registered an eye-popping 171% growth in assets in 2020 and grew its loan book by 12%, more than 30% above Indonesia’s banking system average.
BCA made younger customers the focus of its long-term growth strategy and keys into this largely urban demographic via its sophisticated payments ecosystem under the KlikBCA internet banking platform, the Sakuku e-wallet and the Flazz stored-value card.
The Philippines’ BDO Unibank came through 2020 in decent shape, managing to weather the pandemic storm thanks to solid capital adequacy (14.3%) and a rising customer base, within both corporate and consumer markets. Total loan growth and ROE each came in at 6%. BDO was quick to act in response to the impact of the pandemic on its customer base, providing loan restructuring and moratoria under the Bayanihan I and II programs.
Bangkok Bank excels in Thailand’s corporate banking field, serving a broad array of large domestic and multinational companies across a wide array of industries and via services ranging from corporate finance, transaction and investment banking to trade finance. Notable achievements last year were the provision of project finance advisory services and credit facilities for key infrastructure projects as well as in public debt market underwriting and within structured and asset-backed finance. In the consumer banking sphere, the bank offers a full suite of services through its extensive nationwide branch network and via applications such as Bangkok Bank Mobile Banking.
Vietnam’s MSB grew total loans by 25% in 2020, boosted its customer base by 13% and saw fee income surge 42%, all admirable data points amid challenging regional economic conditions—although the country was spared the worst effects of the pandemic, with relatively few cases of Covid-19 and only one national lockdown. MSB has a strong footprint within the state-owned enterprise sector and managed in 2020 to boost corporate banking net revenue by almost 40%, with profits in that business line soaring over 60% last year.
Once again, Cambodia’s ABA Bank continued its multiyear run of superlative achievements, managing against the onslaught of the pandemic to deliver some remarkable data points: a 21% rise in net profit, combined with a 67% surge in customers and a 40% rise in total assets. This is remarkable in an overbanked country—Cambodia houses 53 commercial banks serving 16 million people—and is testament to ABA’s cutting-edge services facilitated by digital banking solutions and platforms.
Public Bank commands a dominant position within Malaysia’s banking industry, accounting for almost 18% of domestic loans, 33% of the unit trust market, 35% of commercial property financing and 30% of auto financing. The bank survived the brutal business backdrop in Malaysia last year, thanks to the insulation provided by its broad footprint across Asia-Pacific, which stretches from mainland China and Hong Kong, through to Cambodia, Laos, Vietnam and Sri Lanka.
Operating profit for 2020 rose 1.6%, with pressure exerted by pandemic-related provisions and a one-off net modification loss.
Brunei Darussalam’s BIBD is the country’s highest-rated bank (A- S&P Global) thanks in part to its high capitalization, which at 19% sits substantially higher than the 10% regulatory capital adequacy ratio limit.
The bank remains the benchmark for conducting Shariah finance in the country—it operates the largest stand-alone Islamic treasury desk within Southeast Asia—and holds almost 60% of banking system deposits. Net profits fell 12% in 2020, but ROE was a comfortable 11%, shrinking by just 1.5% year on year.
Source: Global finance