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Asia Polls and Awards

Asia’s best banks stand out

Red carpet

The period under review has proved one of the most trying for the region’s financial institutions as global problems combine with financial stresses in domestic markets. Amid this turmoil, the best banks have once again proved their ability to outperform. We present Asia's Best Domestic Banks.




Macquarie gets pigeonholed as an Australian investment bank but since the global financial crisis it has evolved into a very different creature, one that has successfully adapted to new rules of survival.

Of course, it helps that Macquarie derives about one-third of its income from Australia, now in its 24th year of continuous economic growth, but the remainder is spread over the Americas (35%), Europe, Middle East and Africa (20%) and Asia (10%).

Infrastructure is Macquarie's jewel in the crown

The bank has made great strides in reducing reliance on volatile capital markets to about 30% of net profits. Advisory and underwriting revenues have fallen from around 40% of total revenues in 2009 to about 15%. Headcount at Macquarie Securities and Macquarie Capital has been cut by around 45%. Macquarie Asset Management is now the biggest earner, at about 35% of total pre-tax profits. Assets under management grew 2.5 times between September 2009 and March 2016, and base management fees quintupled to A$1.569bn ($1.17bn). The jewel in the crown is Macquarie Infrastructure and Real Assets, the world’s largest infrastructure asset manager. As of September 2015, MIRA managed A$148bn of assets. Annual performance fees linked to MIRA funds recently reached A$693m.

The firm has also been expanding residential and corporate lending, asset finance, motor vehicle and aircraft leasing while maintaining a conservative risk culture that Moody’s Investors Service calls “well-embedded.”



It is testament to Macquarie’s aptitude in ECM that its rival at the top of the Australian league table should be a Swiss bank renowned for equity prowess.

In the year to March 31, 2016, UBS occupied the summit, but Macquarie was only three percentage points below with 20% of the market.

Macquarie was top in IPOs, with 23% of the market and leading UBS by five percentage points. This time there were no jumbo IPOs, just eight smaller listings that totted up to a tidy credit for Macquarie of $1.2bn.

Secondary offerings were dominated by four of Australia’s leading banks raising capital. Between May and October 2015, ANZ, Commonwealth Bank, National Australia Bank and Westpac raised $12.58bn.

Macquarie was one of three banks underwriting Australia’s biggest-ever rights issue. NAB’s A$5.5bn 2-for-25 rights offer was mainly to fund a demerger from its Scottish problem child, Clydesdale Bank, and its UK sister, Yorkshire Bank. NAB pledged to cover £1.7bn ($2.2bn) in future bills Clydesdale may incur in a long-running UK banking scandal over misselling of payment protection insurance.

The rights issue was divided into a $2.12bn institutional tranche in May 2015 and a $2.29bn retail slab the following month. Macquarie received one third of the A$77m in fees.

Macquarie, alongside Morgan Stanley, earned even more by also advising NAB on the demerger and a subsequent IPO of Clydesdale and Yorkshire in February 2016.


Australia and New Zealand Bank

ANZ’s bond stronghold lies at home, in an Australian dollar franchise unrivalled in its breadth and depth. It is what underpins ANZ’s top place on Dealogic’s Australia DCM bookrunner ranking. Apportioned credit for its 73 deals during our award period came to $18.15bn, equivalent to 12% of the market.

The bank’s expertise encompasses corporates, SSAs, FIGs and securitizations.

ANZ has led over 160 corporate bond deals since 2009, more than any other Australian bank. In the 12 months to March 31, 2016, it was joint lead manager on 14 corporate transactions, ranging from an A$120m seven year bond from Melbourne Airport to an A$700m five year issue from SABMiller.

In the SSA segment, ANZ was joint lead manager on two notable Australian dollar benchmarks by the Australian federal government and the government of Queensland and a benchmark Kangaroo from the European Investment Bank. For FIG there was A$1.25bn benchmark from Credit Suisse, and in securitization an A$1.5bn RMBS from Member Equity’s Bank and an A$350m ABS from CNH Industrial Capital Australia backed by agricultural equipment.

ANZ says it has the fastest growing Asia Pacific DCM/structured capital markets platform of any Australian bank, with staff assigned to Singapore and Hong Kong in addition to Sydney, Melbourne and Auckland.

Its challenge now will be to build on its growing franchise in international markets.




ICBC is the world’s largest bank so a steep quarterly drop in profits set off alarm bells about China.

Only by allowing bad-loan provision coverage to fall to 141%, below the 150% mark set by China’s banking regulator, could ICBC wring out a 0.6% rise in net profit for the first three months from a year earlier.

That appeared to bolster concerns about China’s build-up of non-performing loans (NPLs) and a toxic cocktail of rising bank credit, high corporate leverage and excess industrial capacity.

However, ICBC, even with a NPL ratio of 1.66% at the end of March, is in much better shape than Jeremiahs would have you believe. Assets grew at half the rate of the Chinese banking industry in 2015, and customer deposit growth of 4.6% was faster than the 3% for customer lending. The pattern continued in the first quarter. ICBC’s deposits grew 4.64% to Rmb17tr ($2.55tr), while customer loans increased 3.47% to Rmb12tr.

ICBC’s loan-to-deposit ratio is a respectable 72.46%. Wealth management has grown enormously in an effort to tempt and retain depositors through higher yields. Last year, wealth management products grew 32% to Rmb2.6tr, but this is still a small part of the funding base.

“ICBC has a very liquid balance sheet, good capital position and strong profitability,” notes Moody’s Investors Service. When you net $41.6bn profit in 2015 one dud quarter is easily forgiven.


Citic Securities

Judging from China’s portrayal in the world’s media one could easily assume its financial system to be on the brink of collapse. Did its stock market not crash in the summer of 2015, with further spasms in January 2016?

Yet in the storm-wracked 12 months of our award period China’s biggest investment bank saw its apportioned credit from domestic equity deals increase from $7.1bn to $10.37bn.

There were 176 IPOs in the year to April 2016 with a combined value of $19.86bn. Citic Securities was a bookrunner on eight, for which its apportioned credit was a leading $1.85bn. The most significant was last year’s IPO of China National Nuclear Power, the first Chinese nuclear giant to be listed on the A-share market and the biggest IPO in four years. Citic Securities was co-sponsor and lead underwriter. Much national prestige hung on the outcome. Fortunately, CNNP was listed in Shanghai just two days before the stock market bubble popped on 12 June.

China’s equity-linked market is even smaller than Hong Kong’s, but by underwriting two convertibles totalling $815m, Citic Securities also vaulted to the top of that minor league table.

Meanwhile, Citic Securities says its net profit for 2015 increased 75% from a year earlier to Rmb19.8bn.


Citic Securities

Except for one blip, in 2004, Citic Securities has been China’s top bond underwriter since 1998.

Most of the 231 deals that gave it a top 8% share of China’s gargantuan $879bn bond market in our review period won’t register a flicker on radar outside the Mainland.

Among those that did were helping HSBC underwrite its Rmb1bn three year Panda in September, which together with one of equal size and tenor from Bank of China Hong Kong was the first renminbi-denominated bond sold by offshore commercial banks in mainland China.

Bigger in size, if not symbolism, were a Rmb25bn bond issuance by Postal Savings Bank of China, four issues totalling Rmb78bn by the Bank of Beijing and a Rmb30bn trade issued by Central Huijin Investment.

Citic Securities says it has also taken a lead in China’s booming but still vanilla securitization market, especially auto asset-backed securities. Citic Securities has been bookrunner and lead underwriter on several auto ABS deals rated by international agencies, including China’s first revolving auto ABS for SAIC-GMAC Automotive Finance in February.

The government wants financial institutions to securitize more non-performing loans and Citic Securities will be keen as mustard to help.




HSBC has reaffirmed its Pivot to Asia, the way it deploys capital to the world’s fastest growing region, at the same time as keeping its global headquarters in London.

Hong Kong is the fulcrum of that pivot.

To start with, HSBC is the preeminent universal bank in Hong Kong. Together with subsidiary Hang Seng, it dominates retail, while other divisions provide global reach, a “wholesale investment bank for Fortune 500 clients,” as HSBC puts it. HSBC is also the top G3 debt house for Hong Kong issuers and leads the way in offshore renminbi bonds.

Hong Kong’s economy may be slowing but HSBC says it has found new opportunities in helping local corporates reorganise and expand abroad, and in advising local patriarchs on succession. The Cheung Kong-Hutchison empire of billionaire Li Ka-shing is a prime example; HSBC is closely involved in nearly all its key deals. The relative strength of the Hong Kong dollar has added impetus to outbound M&A.

China, especially the Pearl River Delta, is the key focus of HSBC investment. The securities joint venture in Qianhai just across the Hong Kong border will give HSBC majority control and a beachhead for penetrating China’s colossal debt market, an area in which HSBC can offer unrivalled expertise (see our Hong Kong Best Debt House award).

Away from Asia the bank has become tarnished by scandal – the leaks from its private bank in Geneva, followed by the US government’s probe into money-laundering by HSBC Mexico. This year has brought the ‘Panama Papers’ revelations, followed in July by the arrest of a senior HSBC banker on fraud charges.

Luckily, HSBC’s business in Asia, where the bank began and sees its future, is largely free of the mire. Long may that continue.


Citic CLSA Securities

There was a compelling logic behind Citic Securities buying CLSA from Crédit Agricole for $1.25bn in 2013. CLSA’s excellence in Asian equity research and trading would be welded to Citic’s formidable equity pipeline – a huge client base in China coupled with deep political connections in Beijing.

Citic CLSA impressed with the breadth of its equity operation

The synergy is bearing fruit although you sometimes have to look hard to find it. True, Citic CLSA only came top of the equity capital markets league table for the review period thanks to its lead in placements, and two of the biggest were self-led, while it ranked only sixth in initial public offerings. This is outweighed, however, by positives. Firstly, the breadth of IPOs on which Citic CLSA played a leading role: the largest IPOs in banking (China Zheshang), healthcare (3SBio), construction (China Energy Engineering), insurance (China Reinsurance), and hospitals (Wenzhou Kangning Hospital). On five of these six landmark deals Citic CLSA was joint or sole sponsor.

Second is the IPO quality as measured by performance from listing to March 31, 2016. Five out of 12 IPOs on which Citic CLSA was bookrunner registered positive returns – albeit an average of only 0.75%. But that compares well with its rivals. For Morgan Stanley, top IPO bookrunner by deal value, the average was minus 5.11%. For Goldman Sachs, the number three, it was minus 8.92%.

Citic CLSA was also sole bookrunner on three mega placements for state-owned enterprises: HK$27.1bn ($3.49bn) for Citic Securities, HK$5.7bn for Huaneng Power International and HK$3.7bn for Citic Ltd.




HSBC’s share of Hong Kong dollar bond underwriting fell sharply in the year to March 31, 2016, from 42% to 31%, but, as if to underline its unshakeable dominance of the local debt market, that was still three times the portion of nearest competitor Citi.

HSBC was top G3 bookrunner for Hong Kong issuers, with 14% of the market, compared to 9% for Standard Chartered, as well for Chinese issuers, with 8.5%, against 6.3% for Bank of China. HSBC’s total apportioned G3 debt more than doubled in our review period, to $8.3bn. For offshore renminbi bonds it led with 12.8% of the market, followed by 8.3% for Standard Chartered.

Among outstanding deals were AIA’s $750m senior bonds in March, the first 30 year international US dollar issue from Asia ex-Japan this year, and with AIA’s lowest coupon to date in the 30 year tenor.

In February, HSBC was bookrunner and joint lead on Cheung Kong Infrastructure’s $1.2bn perpetual hybrid securities, the first publicly traded corporate hybrid out of Asia in 2016.

New World Development’s $950m seven year bonds in November were NWD’s biggest bond issue and one of the largest ever unrated senior bonds from Asia. Capitalising on the success of Hong Kong SAR’s $1bn inaugural sukuk in 2014, the government issued a $1bn five year wakala sukuk in May 2015 on which HSBC was a joint global co-ordinator.



Axis Bank

India’s third-largest private sector bank does a lot more than ride the wave of a booming economy. While expanding its business to exploit new profit opportunities, Axis also has been preparing for the rougher seas that may lie ahead.

Corporate banking remains the bank’s main strength but for several years, management has prioritised growth in retail and the small and medium enterprise (SME) segment.

Lending is now well balanced between corporate (46%), retail (41%) and SME (13%), but it is not just the high margins of retail and SMEs that have proved attractive. Axis has also sought to grow current and savings account (CASA) deposits to provide cheap funding. Axis now has nearly 17m savings bank accounts, and CASA deposits increased 17% in the 12 months to March 31, 2016.

The fruits of this strategy over the past five years are impressive: consistent annual growth in assets, deposits and net profit. In the last fiscal year alone, core operating revenue was up by 16% and core operating profit by 21%. Prudence is not forgotten. While retail loans grew 24%, Axis ensures that 84% of its retail lending is backed by collateral.

Axis has one of the highest tier one capital ratios in Indian banking: 12.51%. Moody’s Investors Service cites two other “strong buffers” against further asset quality deterioration: a high level of pre-provision income generation, and high loan loss coverage.


Kotak Mahindra Bank

India’s equity capital markets cooled slightly in the 12 months to April 2016 but volume of $13.8bn was still twice the level of two years before.

Kotak Mahindra, our choice again as best equity house, slipped from fourth to sixth position in the ECM bookrunner league table, below Goldman Sachs, Citi, JM Financial, Axis Bank and State Bank of India. Crucially, however, Kotak Mahindra was still top in IPOs, with eight deals that apportioned $259m credit and 11% of the market.

Of the top 10 ECM deals, Kotak was only on two – the Indian Oil $1.4bn follow-on, and the $464m IPO of InterGlobe Aviation – but it was a bookrunner/lead manager on plenty other eye-catching transactions.

Kotak played a key role in structuring India’s largest qualified institutional placement – it was also the first of nonconvertible debentures with stapled warrants – in a mammoth issue by HDFC that succeeded in raising Rp104bn ($1.55bn) from Indian institutions.

Entirely different was a Rp30bn IPO by India largest low-cost carrier IndiGo, which drew strong US institutional interest and was 6.44 times oversubscribed.

Kotak has a huge distribution network in India of 1,209 offices with a direct sales force of 2,741 people. It also boasts 1.19m retail investors, of whom more than half have signed up for online trading.


Axis Bank

In India’s debt markets there has been a lot of toing and froing in terms of league table position of the top banks. From the lofty perch it has occupied for the last nine years, nothing however troubles Axis Bank, least of all minor hiccups in its deal count and apportioned credit. After all, its 17% market share in the year to April 2016 was exactly the same as the year before.

Axis has offices all over India and a client list that includes most of the country’s listed companies. Its deal log for our award period takes up 19 pages.

The bank prides itself on bringing lesser known or more challenging issuers to market, and on lending its large proprietary book to make markets in support of new trends.

It cites helping a non-bank owned by Temasek tap the rupee bond market to shore up its capital. Axis took a proprietary position in the trade and started making a market. Axis also structured debentures issued by a promising but loss-making unit of Tata Industries called Tata Advanced Materials to make them attractive to investors.

The bank also took part in market-making for bonds issued by state governments to bail-out their defaulting power distribution companies.



Bank Rakyat Indonesia

Bank Rakyat Indonesia (BRI) is proof that having a micro focus can offer macro returns. While profits have plunged this year at Indonesia’s largest lender Bank Mandiri, dragged down by non-performing loans to the oil, coal and gas industries, BRI — the nation’s number two bank — has been basking in the sun, thanks to high-margin microfinance.

Last year, BRI’s net profit grew 4.9% to Rph25.41tr ($193m), twice the rate of Mandiri’s increase to Rph21.15tr. In the first quarter of 2016, Mandiri’s net profit plummeted 25% to Rph4tr while BRI’s added 0.6% to Rph6.1tr.

BRI owes its track record as Indonesia’s most profitable bank — measured by returns on assets and equity, and a net interest margin of over 8% — to its solid franchise in microfinance. This accounts for one third of the bank’s total loan book, with small and medium-sized enterprises making up another 40%.

The micro segment is self-funded, with around 86% of lending coming from savings accounts. It is also the most resilient part of BRI’s loan book, giving the bank an enviable NPL ratio of under 2% in the last decade. Moody’s Investors Service notes BRI is also “highly capitalised” and has a liquid balance sheet.

BRI has more than 58 million accounts spread over thousands of islands, the biggest network in the archipelago. To link all the branches, a satellite was launched this June, the first in the world to be owned and operated by a bank. It is a mighty step from BRI’s origin in 1895 as a community lender of cash from a local mosque.


Mandiri Sekuritas

Mandiri Sekuritas’s participation on one mega deal, last year’s $1.4bn rights issue by tobacco company HM Sampoerna, secured its return to the coveted top position in Indonesian equity underwriting.

In a sluggish year for Indonesian equity fundraising, Mandiri was the only Indonesian bookrunner on the October 2015 rights issue by Sampoerna. The other banks were Goldman Sachs, JP Morgan, Citi and Credit Suisse.

All the other equity deals by Mandiri in our award period were minnows by comparison with this whale. The biggest were rights issues by property developer Waskita Karya (Rph5.3bn) and mining and metals company Aneka Tambang (Rph5.4bn).

Mandiri came top of the Dealogic ECM bookrunner table for Indonesia with $507m in underwriting credits, largely thanks to Sampoerna.



At first glance, Indonesia’s debt capital market resembles an exclusive preserve of foreign banks. Starting with Malaysia’s CIMB, with 13% or $2.03bn out of the $16bn underwriting pot, you have to scroll down a long way on the DCM bookrunner table for our award period until you find an Indonesian name. Danareksa, in eighth position, is leading the charge for Indonesian banks.

Danareksa handled 13 deals, for which it was apportioned $851m in underwriting credit.

Of the 10 biggest deals completed in Indonesian DCM during the 12 months to March 31, 2016, no fewer than eight had bookrunners that were all foreign banks. Danareksa was on the other two: a Rph7tr issue by Telekomunikasi Indonesia, and a $1.6bn bond from port corporation Pelabuhan Indonesia II.



Hiroshima Bank

On May 27, Barack Obama stood not far from where the American atomic bomb exploded over Hiroshima, and made an eloquent appeal to eliminate nuclear weapons. He was the first serving US president to visit Hiroshima since the Enola Gay B-29 dropped ‘Little Boy’ on August 6, 1945, ushering in the nuclear age.

Hiroshima Bank: a shimmering hero

The Peace Park where Obama stood is nowadays an oasis of calm in one of Japan’s most vibrant and bustling of cities, and it is Hiroshima Bank, founded in 1945, that financed much of the rebuilding. Hirogin as it is known locally, is the dominant bank in Hiroshima Prefecture, home to its biggest corporate client, Mazda, and with an economy one third the size of Singapore’s. Its profit has grown in all but one of the last 14 years, dipping only at the peak of the global financial crisis. From October to December 2015 net profit grew 18% year-on-year, with all cylinders firing — loans, fee income and trading. Deposits rose 3.2% to top ¥7tr ($65bn) for the first time ever, while consumer lending soared 24.7%, helping offset a small decline in commercial loans. Hirogin also benefits from the lowest non-performing loans among its regional peers.

“A shimmering hero,” is how Citic CLSA’s Japan banks analyst Brian Waterhouse calls the bank, one that is “underresearched, underowned, undervalued.”



The house of Nomura is once again lording it over Japanese equities, having beaten off a strong challenge from Morgan Stanley’s joint venture with Mitsubishi UFJ. For all Japan equity offerings, the gap has widened to 11 percentage points clear of its nearest rival. Seventy-seven deals worth $12.53bn gave Nomura a 27.3% share of equity underwriting.

The oft-repeated barb that Nomura is stronger on volume than quality is not born out by a storming performance.

Nomura played a key role in eight out of the 11 biggest equity deals in the review period. It was a global co-ordinator and bookrunner in the triple-issuer Japan Post Group initial public offerings valued at ¥1.39tr (Japan’s biggest IPO since NTT in 1989), and a ¥109bn Reit by LaSalle Logiport. It was sole bookrunner in the biggest ever convertible bond by Suzuki Motor (¥206bn) as well as a ¥499bn CB by Toyota Motor. For a combination follow-on and CB by Sony Corp valued at ¥438bn, Nomura acted as global co-ordinator and bookrunner for the equity placement and sole bookrunner for the CB. All of these jumbo issues later performed robustly.

Nomura is consistently ranked top in underwriting Japanese convertibles and had a commanding 59% share of the market, according to Dealogic.



Mizuho’s hold over the Japanese debt market has come under sustained attack from Mitsubishi UFJ and its joint venture partner Morgan Stanley, not to mention Nomura, yet somehow the bank still commands the field, through thick and thin.

The sources of its strength lie in yen bonds, where it had one quarter of a $168.6bn market in our review period. Non-yen Japanese bonds have long been the fiefdom of foreign banks; here Mizuho sits in eighth place with a mere 6%.

Among the array of yen bonds it is sometimes hard to see from where Mizuho derives its elixir. Samurais are first to be paraded before foreigners, and here Mizuho’s market share has dipped to 16%. One chink of light is Mizuho’s success in originating Tokyo ‘Pro-Bond’ transactions for professional investors; these included Citigroup and ING issues in 2015.

Given Mizuho Bank’s Japanese client book to-die-for, one would imagine Mizuho leading in corporates. Not so, Mizuho comes in third after MUFG-Morgan Stanley and Nomura.

To find the buried treasure one must dig deeper, to Japanese utility and transport issues, where Mizuho tops with 52 deals and credit of $2.78bn, and above all in sovereigns, supranationals and agencies, where Mizuho notched up an astonishing 271 deals and was credited with $26.99bn. That was 30% of the market, more than twice the share of second-ranked Nomura.

Whoever said SSAs were boring?



Public Bank

‘Safety first’ could be Public Bank’s motto.

In 49 years of operation the bank has never lost money. Net profit grew in each of the last four years, and in the first quarter of 2016 bumped up 5% while falling at its two bigger rivals, Maybank and CIMB. At 17.8%, net return on equity is comfortably higher than peers, while the cost-to-income ratio of 30.5% is far lower — half that of CIMB or RHB. Asset quality too is the highest among major Malaysian banks.

How has Public Bank pulled it off?

Eighty-percent of lending is low-risk retail: residential mortgages; hire purchase for cars and loans to property of middle-market companies. Lending to large corporates is only 6.3% of the total, and exposure to oil, gas and commodities is minimal.

The retail focus started just before the Asian financial crisis of 1997-8. “Corporate lending was rampant. A lot of banks were offering clean loans, with no security at all,” recalls Ng Siew Kuan, director of corporate planning & strategy. At the same time, the bank heeded the increase in household wealth, and rising demand for cars and better housing.

Public Bank has a strong risk culture; one reason it prefers organic growth to acquisitions. “We like to start from scratch and inculcate staff in our way of doing business,” Ng explains.

This includes playing the company song, ‘A Dream was Born,’ in English and Malay every morning, at every branch.


Malayan Banking Berhad (Maybank)

Competition for the top honour of Malaysia’s equity capital markets is habitually a three-horse race between Maybank, CIMB and RHB Capital.

This year we chose Maybank, the largest financial services provider in Malaysia, for best equity house not because it has the highest score in ECM – it hasn’t – but because we liked its breadth of deals. We also happened to notice that Maybank is way ahead in Malaysian mergers & acquisitions; maybe not directly relevant, but worth bearing in mind.

In IPOs, Maybank was a whisker behind RHB Capital, with four deals worth $229m in underwriting credit in our awards period, against five deals and $238m credit for RHB.

By far the largest IPO in 2015 was Malakoff Corporation, a Malaysian water and power utility. Bookrunners on the MR2.8bn ($792m) transaction in April 2015 were all the usual big foreign names plus Maybank, RHB and CIMB. Importantly, only Maybank and JP Morgan were chosen for a MR444m secondary sell-down in Malakoff later in November.

Maybank also took part in the three largest Malaysian rights offerings of Hong Leong Bank (MR2.99bn), RHB Capital (MR2.3bn) and Hong Leong Financial (MR1.1bn).



CIMB reigns supreme in Malaysian ringgit bonds and is a world leader in Islamic finance.

The bank has placed first in the Malaysian ringgit league table for the past 11 years. In our award period, its 44 ringgit issues yielded $5.12bn underwriting credit. This was the lion’s share of 54 deals and $6.46bn credit for CIMB in the Malaysian DCM bookrunner league table, which gave the bank a dominant 26% of the whole market.

In the 12 months to March 31, 2016, six of the top 10 DCM transactions in Malaysia involved CIMB as bookrunner. Four were SSAs. The two corporates were a MR8.98bn issue by Jimah East Power and a MR2bn issue by Jambatan Kedua, concessionaire for the Second Penang Bridge.

CIMB is particularly proud of its leadership in sukuk issuance, including the new sustainable and responsible investment sukuk. CIMB was sole lead arranger on the first SRI sukuk in ringgit – Khazanah Nasional’s MR100m deal from June 2015.

The majority of CIMB’s other landmark deals are also in Islamic finance. It was the only Asian bank appointed as lead manager, bookrunner and shariah adviser for the Indonesian government’s $10bn ‘sukuk wakala’ programme.

CIMB was also bookrunner and lead manager for Indonesia’s issuance of $3.5bn notes, the largest by an emerging market sovereign during the second half of 2015.



Khan Bank

Khan Bank is one of Asia’s most remarkable turnarounds. From an insolvent wreck in 2000, it has become Mongolia’s second largest bank by assets, praised this June by Moody’s Investors Service for “strong profitability,” “good level of funding and liquidity” and a “granular loan book.”

It used to be the Agricultural Cooperative Bank, put together in 1991 from rural assets of the old State Bank. Privatised only in name, Ag Bank was obliged to prop up state enterprises and was burdened with bad loans. In 1999 it was placed in receivership. As part of a World Bank restructuring, it was renationalised and recapitalised by the Mongolian government. USAID then funded an American management team to take over and within four months the bank was breaking even.

In 2003 the Ag Bank was auctioned off to the Japanese travel and leisure empire of Hideo Sawada for $6.85m. Sawada’s main interests include a discount travel agency and an airline and a Dutch theme park near Nagasaki. Sawada Holdings and its Hong Kong unit own 54.41% of Khan Bank. Hideo Sawada remains chairman and from 2011 until this April the bank also had a Japanese CEO.

As of June 2015, Khan Bank served over 2.3 million customers through 538 branches. It claims to reach more than 98% of rural communities, including nomadic Mongolian herdsmen, whose seasonal needs are met with special ‘herder loans.’

Khan Bank reported a 21.4% jump in net income in 2015, to Mt120.4bn ($58.9m).



Habib Bank

Replacing civil servants who used to run Pakistan’s debt-ridden publicly owned banks with professionals was a high point of Nawaz Sharif’s first term as prime minister in the late 1990s. It kicked off a process that culminated in 2015 with the sale of the government’s entire holding in Habib Bank (HBL) for Prp102.4bn ($1bn).

Privatisation of Pakistan’s biggest bank began with the sale of a controlling stake to the Aga Khan Fund for Economic Development in 2004. Revenue has since increased five times and operating profit by six-and-a-half times, while deposits and total assets have both more than quadrupled.

International remittances from Pakistanis working overseas – mainly in the Gulf, United States and UK – have shown double-digit growth in recent years. HBL has a 24% share of this lucrative market and is keen to exploit cross-selling possibilities.

HBL also has made good progress in increasing use of telephone and internet banking, and last year bought the Pakistan business of Barclays. This year it entered microfinance, of considerable potential given that the majority of Pakistan’s population is still rural.

HBL maintains high cash provisions against potential credit losses but Moody’s Investors Service is concerned by weak capital buffers stemming from heavy exposure to the B3 rated Pakistani government. At the end of 2015, HBL’s holding of Pakistan government bonds securities amounted to 49% of total assets, or 7.9 times its tier one capital.


Arif Habib Ltd

Pakistan has a plethora of brokerages but none come close to Arif Habib Limited’s capitalisation. This matters because, as CEO Shahid Ali Habib reminded Asiamoney, adequate capital is a must for capturing big deals.

AHL’s market cap at the end of 2015 was Prp3.6bn — equivalent to 2.8 times the Pakistan Stock Exchange’s daily trading average of $133m.

Arif Habib benefited from booming markets

Deals in Pakistan do not come any bigger than the secondary public offering of Habib Bank in April 2015. The government sold its entire residual holding of 41.54% of the nation’s biggest bank for Prp102.4bn. The lead managers and bookrunners were Credit Suisse, Deutsche Bank, AHL and Pakistani brokerage Elixir Securities. CEO Habib said AHL’s share of the domestic tranche in Pakistan’s largest ever capital market transaction was 80%. AHL was also lead manager and bookrunner for South Asia’s first listing of a rental real estate investment trust, the initial public offering in June of Dolmen City Reit for Prp6.1bn, and the Prp1.6bn IPO in January 2016 of Hi-Tech Lubricants.

Its share of the Pakistani brokerage market averaged 10% in the 12 months to the end of March 2016, when it made $5.6m in net profit. AHL belongs to the Arif Habib Group, a conglomerate with interests spanning heavy industry, finance and property.



BDO Unibank

BDO Unibank’s ascent to the pinnacle of Philippine banking began long before the recent growth spurt of the Philippine economy. It is bound up with the rags-to-riches story of Chinese immigrant Henry Sy, whose Sy Group is now the largest retail conglomerate in the Philippines.

Along the way, Henry Sy picked up a bank, the two-branch Acme Savings Bank, which he renamed the Banco de Oro. In 2001 Banco de Oro merged with Dao Heng Bank Philippines, the first of a string of opportunistic purchases of foreign bank operations in the Philippines. The most important was the 2007 merger with Equitable PCI, one of the largest banks in the Philippines.

BDO’s assets have ballooned from Ps13bn ($276m) in 1994 to Ps2.07tr today. In just the five years from 2010 to 2015, customer loans and deposits both doubled. Net income rose in each of those five years and in 2015 was three times the level in 2010.


BPI Capital

The Philippine economy has been booming yet its equity market remains tiny. Trading liquidity is very low and listed companies number less than half their counterparts in Vietnam. What equity capital market deals exist tend to be quickly snatched by foreign banks.

Rivals Bank of the Philippine Islands and BDO Unibank found themselves fighting for two IPOs in our review period, both rare oases for underwriters in an otherwise parched equity landscape.

BPI was a joint global co-ordinator and lead underwriter with Deutsche Bank on the second-biggest Philippine equity deal, a $77m IPO of Metro Retail Stores. BPI’s equal half share of just this one deal gave it 13% of the entire equity underwriting market and third spot in an ECM bookrunner league table led by Deutsche, which notched up two deals.

Based in Cebu, Metro Retail Stores is typical of enterprises geared to the consumer that have been growing strongly but still comprise less than 10% of the stock exchange weighting.

Metro was part of a family business. BPI had to extract the retail bit, install a proper corporate structure and governance with tax efficiency and sound accounting, and then sell into a volatile market. It worked, and the institutional tranche was 3.6 times oversubscribed.


BPI Capital

The Philippine debt market was $27.17bn in our review period, yet even more dominated than equity by foreign banks. Nine out of the top 10 DCM deals were SSAs and bookrunners were all North American, European or Japanese houses.

The only big deal in which both BDO and BPI joined the party was a Ps33.5bn issue of preferred shares for San Miguel.

BPI showed its mettle in three smaller bond issues. Two were for Ayala Land, the largest property firm in the Philippines and owned by Ayala Corporation that also controls BPI.

Liquidity had suddenly dried up and there was no benchmark for pricing Ayala’s Ps7bn seven year in May 2015, so BPI came up with its own benchmark that won acceptance from investors and the issuer. The second Ayala bond was a Ps8bn 10 year issue in March 2016. BPI took advantage of a new rule allowing shelf registration, the first such deal in the Philippines.

A Ps24bn three tranche bond of five, seven and 12 year bonds by Aboitiz Equity Ventures, holding company for a power and infrastructure family conglomerate, was also a standout. BPI shared the book with SM Investments. Having just two banks on a deal of this size demonstrated the liquidity now available and BPI’s local distribution might, as it sold to mostly retail and high net-worth investors.




Scorching results illustrate why Singapore’s biggest bank is among Asia’s best. Net profit at DBS rose to a record last year before surging another 20% in the first quarter.

DBS continues to capture the lion's share in Singapore

All the while economic growth sputtered in the bank’s three biggest markets – Singapore, Hong Kong and mainland China. In spite of plunging confidence, DBS’s ratio of non-performing loans barely budged – from 0.9% to 1% in Q1 of 2016 – while tier one capital increased to a rock-solid 14.3%. Resilience and prudence are core strengths of DBS, which posted profits even during the Asian financial crisis of 1997-8 and the global financial crisis of 2008-9.

Another is being nimble enough to exploit opportunities, like Asia’s growing demand for wealth management. In 2014 DBS bought the private banking business of Société Générale in Singapore and Hong Kong and CEO Piyush Gupta has said more acquisitions may follow.

Wealth management income grew a record 29% last year to S$1.4bn ($1.03bn), almost triple the amount earned in 2009. Wealth management fees jumped 47% in Q1 from the previous quarter.

DBS already is pre-eminent in Singapore’s capital markets and leads in large corporate banking, savings and corporate deposits.

“I think the battleground now is Alibaba and digital,” Gupta said in April. DBS is alert to that challenge and has already proven a leader in the digitisation of banking services.



Singapore’s equity capital market is a pale reflection of its former glory. DBS rules a roost that had shrunk to $2.77bn during our award period. The bank’s 13 deals earned league table credit of $672m, sharply down from $873m the year before. It was no compensation that in a shrivelled market its share was boosted to 24%, neck and neck with JP Morgan, which was apportioned credit of $670m for doing just three deals.

For IPOs the Singapore market is even more dire. DBS did only one deal, the $180.5m BHG Retail Reit in December 2015, for which it was sole adviser, bookrunner and underwriter.

Thankfully the IPO had special merit, being the first pure-play China retail Reit sponsored by a China-based group. It earned DBS credit of $183m and top place in the IPO league table, with a 49% share of a small IPO market.

The biggest follow-on for DBS was the S$412m offering by Keppel Infrastructure Trust, comprising a placement and a preferential offering. The book was shared with UBS and Credit Suisse.



DBS enlarged its dominance of the Singapore dollar bond market in the year to April 2016. The gap with second-ranked OCBC yawned ever wider, as the underwriting share of DBS jumped from 37% to 45%, and its apportioned credit from $5.9bn to $6.7bn. OCBC’s market share was less than half that of its rival.

Among international issuers DBS drew to the Singapore dollar market for the first time were Ford Motor Credit Company, AusNet Services Holdings, Julius Baer Group, Bank of China and BPCE.

DBS faces far more competition in international bond markets where it has to specialise to thrive. In the review period it burnished a reputation for selling offshore renminbi bonds, such as Bank of China’s Rmb2bn two year notes, Lenovo Group’s Rmb4bn four year ticket and Rosy Capital’s debut Rmb1.3bn three year trade.

Other strengths include structuring sophisticated instruments such as hybrid debt securities, secured property deals, collateralised loan obligations and other forms of securitization.



Busan Bank

Being a local champion has served Busan Bank very well. The largest regional lender is consistently ranked one of South Korea’s most profitable banks.

The bank’s bastion is in Gyeongsang Province and Ulsan in the southeast, and in its home base in neighbouring Busan, South Korea’s second-biggest city, where it commands 34% of deposits and 27% of loans. Total assets and deposits have both grown strongly in recent years.

Competition has eased considerably since parent BNK Financial last year completed the acquisition of local rival Kyongnam Bank from government-controlled Woori Group.

Access to stable and low-cost deposits in its home region, and the ability to charge high lending rates to a core customer base of small and medium-sized enterprises has lifted Busan Bank’s net interest margin, as well as its return on equity and return on assets, to well above industry averages.

The focus on SMEs, a legacy of an old legal requirement for regional banks, is of particular benefit now that large corporates rely more on capital markets than banks for funding, and in many sectors are plagued by overcapacity, with rising non-performing loans.


NH Investment & Securities

The overall lead of NH Investment & Securities in South Korea’s equity capital markets is narrowing but in lucrative new offerings it commands the field.

For new listings in the period under review, NH captured 25% of the market, a full nine percentage points ahead of nearest rival Korea Investment & Securities. Once placements are added its winning margin was just four points.

NH was sole lead manager in the blowout initial public offering (IPO) of Korean arms maker LIG Nex1, priced in September 2015. The book for the W524bn ($446m) issue ended up 121 times covered, with demand split evenly between international and domestic accounts, despite the lack of foreign bookrunners.

Another standout IPO was the W154bn listing of Jeju Air, which soared 65% above its IPO price when trading opened in November. NH was lead manager and bookrunner.

NH was lead manager for the W472.5bn rights issue in January 2016 of BNK Financial Group, parent of Busan Bank, and jointly led the W1.3tr rights issue in February of Samsung Engineering, together with Korea Investment & Securities.

 In July 2015, NH was one of four global co-ordinators for the W340bn IPO of Innocean Worldwide, an advertising agency backed by Hyundai Motors.

NH merged with Woori Investment & Securities following a W1.07tr acquisition by its parent Nonghyup Financial Group in 2014.


KB Investment & Securities

Volumes in South Korea’s bond markets have slackened since 2014 as some large corporate defaults, low domestic yields and the prospect of higher US rates cut investor appetite.

In the all-important corporate bond market KB Financial Group has weathered the downturn. Its 17% corporate underwriting share in our review period was the highest among the debt houses, a leadership it has kept for four out of the past five calendar years, according to Dealogic.

A main driver has been a willingness to underwrite bonds with low credit ratings, according to a Seoul analyst who asked not to be identified. Earlier this year, KB Investment & Securities announced it would stop chasing volume and market share and instead concentrate on profit.

A major source of earnings growth is South Korea’s booming market in asset-backed securities. ABS volume so far this year is already 4.5 times the total for the whole of 2015, and just as last year, KB is leading the pack, with 13.7% of the market.

 The investment bank is well positioned to gain further leadership in the future. This year, KB Financial succeeded in beating off Korea Investment & Securities to acquire Hyundai Securities for W1.25tr. The seller was debt-ridden Hyundai Merchant Marine, South Korea’s second-largest shipper. Hyundai Securities was relatively strong in ECM, as well as in project financing of property.

The travails of shrinking chaebol conglomerates are proving manna for Korean banking groups like KB Financial seeking to grow their presence.



E.SUN Bank

One feature makes E.SUN really stand out. It is the only domestic bank in Taiwan free from government control or ties to wealthy families.

Of 39 local banks, 10 are under the government. Together, they have more than half of all loans and deposits. Another 26 banks are under the sway of founding families.

Conflicts of interest are rife in Taiwanese banking. Being independent, professionally managed, and with high standards of corporate governance and transparency, helps E.SUN attract and retain both customers and foreign investors, who hold 58% of its shares.

The benefits show in performance. Net income almost quadrupled over four years to NT$12.8bn ($402m) in 2015, and rose another 16% in the first three months of 2016. With margins compressed, most of the profit growth comes from wealth management fee income, which last year was 36% of revenue.

Lending is well balanced between corporates (23.9%), small and medium enterprises (25.5%) and retail (50.6%). The SME franchise is the largest in Taiwan. E.SUN says it is also the biggest lender to private-sector corporates. Assets have risen steadily over five years and its ratio of non-performing loans has been consistently below the industry average for the past decade. The loan-to-deposit ratio is a comfortable 70%.

S&P Global praises E.SUN’s risk management and success in establishing “a prudent franchise image and stable customer base.


KGI Securities

KGI Securities owes its league-topping success in Taiwanese equity underwriting to a series of acquisitions and mergers.

KGI Securities was the brokerage arm of the Koos Group, owned by one of Taiwan’s richest families, who still control CTBC Bank. In 2012, China Development Financial Holdings bought KGI from the Koo family. CDF then merged its own brokerage subsidiary Grand Cathay Securities into KGI.

Mergers do not always work but in this case there was a pooling of complementary strengths and in market share the new KGI leapfrogged the competition. In our review period it racked up 40 equity deals with $1.5bn in apportioned credit, a 21% share of the market. KGI was sole bookrunner in the biggest equity deal, the NT$23.5bn follow-on by First Financial Holding.

Overseas operations in Hong Kong, Singapore, Thailand and China currently account for about one quarter of KGI’s profit. The group aims to become the largest local retail brokerage with full licences in all major Asian markets. At the current pace that is not unattainable.


Yuanta Securities

Yuanta Securities wrested first place in the domestic currency bookrunner league table for Taiwanese banks from arch-rival KGI for the first time in three years, according to the Dealogic rankings for the 12-month period to April 2016.

Yuanta was a bookrunner in nine out of the top 10 DCM deals during our review period, including the $480m issue by E.SUN Commercial Bank and the $321m Dragon Steel Corp bond.

In foreign currency bonds from Taiwan issuers Yuanta ranked second after HSBC, and was the only Taiwanese house among the top four underwriters.

Yuanta’s current weakness is in Formosa bonds – deals sold by foreign issuers into Taiwan’s domestic market.

So far this year, E.SUN has captured most of the Formosa bond underwriting market. It remains to be seen whether Yuanta can hone its skills and extend its underwriting prowess into international bonds.




In contrast with Thailand’s reputation for political turmoil, its three major banks – Bangkok Bank (BBL), Siam Commercial Bank (SCB) and Kasikornbank (KBank) – are relatively stable and well managed.

KBank is in turn with the needs of SMEs

BBL dominates in corporate loans, while SCB leads in retail. KBank’s strength is in the small and medium enterprise (SME) segment, with a market share of 30%. KBank is the smallest of the troika in terms of assets but its profitability is consistently superior. Its net interest margin (NIM) – 3.62% for the first three months of 2016 – has surpassed its peers for the last five years, thanks to a focus on growing retail and SME loans. Fee and insurance income has also made a healthy contribution as a result of the bank’s cross-selling strategy.

Net profit for January to March soared 76% over the previous quarter in spite of a 28% increase in bad loan provisions stemming from Thailand’s slowing economy.

KBank’s loan portfolio is more balanced than other Thai banks, comprising 38% SME loans, 30% corporate loans and 26% retail loans. A large deposit base supports KBank’s low cost of funding and high NIM. At the end of last year, 67% of assets were funded by customer deposits. The franchise rests on a nationwide network of 1,120 branches built up over 70 years.

More of KBank’s SME borrowers will be battered by Thailand’s economic headwinds but Moody’s Investors Service is confident that the bank is well prepared.


Siam Commercial Bank

Fortune smiled on Siam Commercial Bank in the last year, if not on the Thai economy. A succession of lucrative IPO deals gave SCB an overwhelming 37% share of Thailand’s equity underwriting market in the 12 months to April 2016.

According to Dealogic, SCB was apportioned $829m credit for just five deals. Second place Kasikorn Securities only managed $180m from three deals.

SCB was sole bookrunner on a Bt20.9bn ($598m) IPO by one power plant block in an infrastructure fund of the Electricity Generation Authority of Thailand. It shared with other banks a Bt12.95bn IPO of the Star Petroleum Refining Company, and a Bt3.2bn IPO of Bangkok Ranch which produces duck meat.



Thailand’s economic woes led to another contraction in debt capital market volume, to $16.7bn, in the 12 months to April 2016.

At $2.27bn, the underwriting credit tally of KBank was a tad shy of Krung Thai Bank’s winning $2.73bn, but we felt that it came first in quality, particularly in sovereigns.

KBank was joint lead arranger for landmark Thai baht and US dollar bonds issued by the Ministry of Finance of neighbouring Laos. The three tranche Bt12bn issue was divided into three, seven and 10 year tranches. It was the largest-ever Thai baht issue by the Laos MoF and at the time had the longest tenor.

The US dollar bonds were the first ever issued by the Laos MoF and set a new record for their tenor, the $182m issue being divided into 10 and 12 year tranches.

We were also impressed by KBank’s work on bonds with complex or innovative structures that converted project finance to corporate finance or retail to an institutional investor base, as well as sovereign bond switch for the Thai MoF between near-maturity and illiquid bonds into longer dated notes.



Saigon-Hanoi Commercial

Joint Stock Bank

Vietnam’s banks were badly damaged by a credit blowout four years ago, when a bursting asset bubble threatened much of the industry with insolvency.

At the time, profits of joint-stock commercial banks (JSCBs) were worst hit, with return on equity (ROE) a shell-shocked 2.89%.

Consolidation has cut the number of domestic banks by 15 to 32, and since 2013 they can swap non-performing loans (NPLs) at cost for no-coupon bonds issued by the Vietnam Asset Management Corp (VMAC). The economy has improved, with the property market showing renewed signs of life.

Benefits are apparent at Saigon-Hanoi JSCB, where at the end of last year ROE was 10.9%, NPLs were 1.72% of assets, and NPL coverage rose to 92.21%. SHB has transferred $318m-worth of NPLs off its books for VMAC bonds, and Moody’s points out that NPLs would be higher if these bonds were included.

SHB’s loan book is relatively well balanced, with 62% going to non-state companies, and 18% to retail customers. SHB has high hopes that its 3% net income margin will rise further after completing acquisition of a consumer finance company in June. Overall lending grew 23% in 2015, down from 36% in 2014, but still high enough to raise eyebrows at Moody’s.

Deposits grew 21% in 2015 and 18% in 2014, reducing SHB’s reliance on short-term market funds for funding. The 73% ratio of deposits-to-total assets remains low, as is the 9.1% tier one capital ratio. Like other Vietnamese banks, SHB still has a long way to go.