For banks within the Asia-Pacific (APAC) region, the onslaught of Covid-19 is maybe best characterised as an unprecedented externality that has served to reveal – in stark relief – the twin dynamics of transformation and consolidation that were happening before the outbreak of the pandemic.
This momentum has accelerated because of a brutal economic slowdown, shrinking margins, fierce competition and tightening return on equity (ROE). It marks a rapid acceleration of forces that were steadily growing pre-pandemic, characterised by rapidly changing customer expectations and behaviors, and which have returned home with great speed within the face of lockdowns, social distancing and job insecurity.
Banks within the APAC region now must work harder towards ROE, which has led many to deal with areas which have been relatively insulated from the impact of the pandemic, akin to investment banking, wealth management, high-end advisory services and insurance. Many have sought a positive shift by moving down the credit curve to higher-yielding segments akin to project finance and unsecured lending.
Traditional, incumbent banks may view the onslaught of fintech and the competition it poses to traditional business models with fear. In response, the one real option was to embrace this technological revolution, in lots of cases by investing in emerging competition.
In Southeast Asia
DBS, Global Finance’s top Singapore bank, managed to grow its operating profit by 2% in 2020, achieving record revenue of 8.4 billion Singapore dollars ($6.3 billion), a testament to its franchise’s resilience within the face of a bunch of adversities , including low rates of interest. The bank has reaped the rewards of over eight years of digital investment, which has enabled it to rework right into a latest way of operating through a spread of contemporary technologies, including the usage of cloud, deep data infrastructure, artificial intelligence and machine learning.
The bank continues to attain high results when it comes to sustainability, which is included within the Dow Jones Sustainability Index. DBS also ranks in the highest quartile of the worldwide Bloomberg Gender Equality Index for the fourth 12 months in a row.
UAB Bank in Myanmar has achieved loads within the 11 years since its founding. Over the past five years, the bank has achieved a somewhat astonishing compound annual growth rate in pre-tax profit of 242%, maintained its non-performing loan limit at just 5% (some banks in Myanmar use an NPL rate of fifty%), and enjoyed a really competitive cost-to-value ratio income of just over 50%. UAB was the primary bank within the country to accentuate its activities at first of the pandemic, offering assistance packages to borrowers.
Indonesia’s BCA (Bank Central Asia) is well ahead of its domestic competition when it comes to sheer scale, asset quality and arguably corporate ambition. The bank recorded a powerful 171% increase in assets in 2020 and increased its loan portfolio by 12%, greater than 30% above the typical of the Indonesian banking system.
BCA has focused its long-term growth strategy on younger customers and has entered this largely urban demographic through a classy payments ecosystem across its KlikBCA online banking platform, Sakuku e-wallet and Flazz prepaid card.
Philippines’ BDO Unibank has weathered 2020 in decent shape, weathering the pandemic storm with solid capital adequacy (14.3%) and a growing customer base in each the company and consumer markets. Total loan growth and ROE were 6%. BDO responded quickly to the impact of the pandemic on its customer base by providing loan restructuring and moratoriums under the Bayanihan I and II programs.
Bangkok Bank focuses on Thai corporate banking, serving a big selection of enormous domestic and international corporations across quite a lot of industries and offering services starting from corporate finance, transaction and investment banking to trade finance. Significant achievements of the past 12 months include the supply of advisory services in the sphere of project financing and granting loans for key infrastructure projects, in addition to in the sphere of underwriting issues on the general public debt market and structured and asset-secured financing. In the realm of retail banking, the bank offers a full range of services through an in depth nationwide branch network and applications akin to Bangkok Bank Mobile Banking.
Vietnam’s MSB increased its total lending by 25% in 2020, grew its customer base by 13% and saw its fee income increase by 42% – all admirable figures within the face of adverse regional economic conditions – although the country was spared the worst effects of the pandemic , with relatively few cases of Covid-19 and just one national lockdown. MSB has a powerful position within the state-owned enterprise sector and managed to extend net revenues from corporate banking by almost 40% in 2020, while profits on this business line increased by over 60% last 12 months.
Once again, Cambodia’s ABA Bank continued its multi-year streak of outstanding achievements, weathering the onslaught of the pandemic and delivering remarkable numbers: a 21% increase in net profit coupled with a 67% increase in customer numbers and a 40% increase in total assets. This is remarkable in a banking-heavy country – Cambodia has 53 industrial banks serving 16 million people – and is a testament to ABA’s cutting-edge services available through digital banking solutions and platforms.
Public Bank holds a dominant position within the Malaysian banking industry, accounting for nearly 18% of domestic lending, 33% of the mutual fund market, 35% of business real estate financing and 30% of automobile financing. The bank weathered brutal business conditions in Malaysia last 12 months because of the insulation provided by its wide-ranging operations within the Asia-Pacific region, which stretches from mainland China and Hong Kong to Cambodia, Laos, Vietnam and Sri Lanka.
2020 operating profit increased 1.6% under pressure from pandemic-related provisions and a one-time net modification loss.
BIBD Brunei Darussalam is the very best rated bank within the country (AS&P Global), thanks partly to its high capitalization which, at 19%, is significantly higher than the ten% regulatory capital adequacy ratio limit.
The bank stays a benchmark within the conduct of Sharia finance within the country – it runs the most important stand-alone Islamic tax office in Southeast Asia – and holds almost 60% of deposits within the banking system. Net profit was down 12% in 2020, but ROE was a cushty 11% and down just 1.5% 12 months over 12 months.
Source: Global Finance
