AUSTRALIA AND NEW ZEALAND BANKING GROUP
ANZ Banking Group, the smallest of the four-largest Australian banks, expects to meet its 8% earnings growth target this year, despite weakness in corporate loan demand, its traditional area of strength. While ANZ is cautious about its exposure to the US energy sector, provisions for losses in international investment banking likely have peaked. Following the sale of its Grindlay’s operations to Standard Chartered in 2000, ANZ is sticking closer to home. It recently scrapped plans to take a minority interest in Thai Military Bank, saying that the transaction didn’t fit its low-risk profile. At press time, ANZ was considering buying National Bank of New Zealand from Lloyds TSB Group of the UK if the price is right.
John McFarlane, CEO
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
The largest commercial bank in China, and one of the largest in the world, ICBC had deposits outstanding of Rmb346.6 billion and loans outstanding of Rmb2,529.9 billion. The bank has issued more than 75 million Peony cards and leads the way with new technology banking, offering real-time funds transfer and settlement facilities, Internet B2B services and telephone banking.Use of technology has enabled ICBC to cut staff and branches—there are still some 30,000 of the latter—and the bank has been aggressive in streamlining its operations. ICBC accounts for around a third of domestic assets and undertakes about half of the country’s banking settlements. The bank has an international presence, with branches and representative offices throughout Asia, Europe and the US. ICBC is slated for privatization in the next three to five years and, if the Chinese government fulfills its promises to reform the banking sector, will doubtless be viewed with interest by outside investors.
Jiang Jianqing, chairman and president
HSBC, the largest bank in Hong Kong, also owns 62% of Hang Seng Bank, the second-largest listed bank in terms of market capitalization. Hang Seng compiles Hong Kong’s major stock market index. HSBC issues 63% of the special administrative region’s bank notes. Established in Hong Kong and Shanghai in 1865, UK-based HSBC is the leading provider of trade-finance services in Asia.The bank plans to concentrate on wealth management as a source of future growth. HSBC’s purchase this year of Household International, the US consumer finance company, could help it gain the expertise to sell more credit cards to its existing customers. While personal finance will continue to make up the bulk of HSBC’s profit, the bank is the leading provider of treasury and cash-management services in Hong Kong.
Stephen K. Green, CEO
After the merger between ICICI Limited and ICICI, the resultant ICICI Bank Ltd (India’s second-largest financial institution) has made deep inroads into India’s retail banking sector. In 2002, the bank’s retail assets rocketed by 149%, putting them at 15% of total assets and 25% of customer assets at the end of 2002.This compares to respective figures of 6% and 11% at the end of that year’s first quarter. Corporate assets have declined, partly due to the bank’s selling-down of loans and repayments of maturing corporate assets.
K.V. Kamath, CEO
Bank Mandiri was set for an IPO at the end of 2002, but jitters caused by unhappiness at the state’s privatization plans, as well as by the Bali terrorist bombings of late 2002, delayed it. Born out of the financial crisis of 1998 as a merger of four stateowned banks, Bank Mandiri has turned around its balance sheet.Non-performing loans had fallen from 71.29% to 9% by late last year. The bank focused on cutting costs through integrating IT platforms. In 2002, Bank Mandiri was mandated by the government to reprofile more than 100 trillion rupees of bonds.
MITSUBISHI TOKYO FINANCIAL GROUP
Mitsubishi Tokyo (MTFG) is the only one of Japan’s seven big lenders that doesn’t owe money to the government for a rescue operation. MTFG is among the soundest of Japan’s troubled banks, although its dependence on investment income linked to the performance of the stock market makes its earnings volatile.
MTFG plans to develop an advanced foreign exchange yen-settlement system with JPMorgan Chase of the US. Specialized trust services, derivatives and retail banking are among the bank’s traditional strengths. It boasts a solid base of top-quality corporate clients. The bank completed a global offering of shares and ADRs in March 2003.
Akio Utsumi, chairman and co-CEO
Shigemitsu Miki, president and co- CEO
While not the largest bank in the country, Public Bank has been fastest off the blocks since Malaysia’s banks consolidated at the end of the 1990s. The bank has achieved loan growth of around 10%, more than double the average of the sector as a whole. Public Bank’s core business is serving small and medium enterprises, which receive nearly half of the bank’s new loans. Public Bank has the highest growth rate in the area. Deposits at the bank have also risen more steeply than at its rivals, with Public wooing retail and corporate accounts with telebanking and a rapidly expanding e-bank.
Teh Hong Piow, chairman
NATIONAL BANK OF PAKISTAN
The largest commercial bank in Pakistan, NBP is majority owned by the Pakistani government. As well as traditional banking activities, the bank provides a broad range of services including collection of taxes and delivery of salaries and pensions to the country’s public sector employees. It has stripped away bureaucracy to improve operating profits, and in 2002 made an aftertax profit of Rs2.25 billion, up a sharp 96% on the previous year’s Rs1.15 billion. The bank’s risk profile is conservative, partly because much of NBP’s business is conducted with state bodies and also because it holds large levels of government securities.
Syed Ali Raza, president
BANK OF THE PHILIPPINE ISLANDS
Philippine banks are still carrying the burden of bad loans from previous lending splurges. Although BPI has kept its non-performing loan percentages in low double figures rather than the high teens of most of its competitors, its success over the last year has been predominantly driven by income generated from trading rather than lending. Lower loan yields and weakened corporate willingness to take on debt has meant that the bank has concentrated on making money in other areas, such as securities trading and foreign exchange.
BPI has increased operational efficiency, and cut operating expenses by 4%, despite continued investments in IT. Staff numbers were slimmed by more than 5% in 2002.
BPI made profits of Ps5.2 billion in 2002, giving a return on equity of 10.3% and return on assets of 1.3%.
Jaime Zobel de Ayala, chairman
DBS is the biggest bank in Singapore by assets and the fourth-largest in Hong Kong, where it recently merged its three local banking operations. DBS led the Singapore market in IPOs, share placements, loan syndications and M&A; advisory deals in the first half of 2003. The bank’s earnings have been hurt in the first half of this year by a squeeze on interest margins on mortgages in an intensely competitive market. This has been offset to some extent by rising fee and commission income. DBS has about 800 ATMs in Singapore and is a leader in deposits. Other strengths include treasury services, securities brokerage and corporate bond issuance.
Jackson Tai, vice-chairman and CEO
When the government revised loanloss provisioning guidelines for banks in 2002, Shinhan Bank was in good stead, having conservatively put W168.3 billion of provisions in place the previous year—three times more than it did in 2002. Partly as a result, Shinhan Bank saw its profits grow by a remarkable 72%. It also has a non-performing loan ratio of 2.42%, down from 1.42% at the end of 2001. Shinhan Financial Group’s assets rose 23% to W80.8 trillion as of the end of December 2002, and the bank’s assets rose 12% to W69.7 trillion.The bank is wholly owned by the Shinhan Financial Group, which has been used to acquire interests for the bank such as in April 2002 buying up the brokerage Good Morning Securities.
Sang-Hoon Shin, president and CEO
COMMERCIAL BANK OF CEYLON
After two decades of ethnic strife, Sri Lanka is beginning to enjoy the peace dividend—constructive use of resources, access to capital and rising living standards.Commercial Bank of Ceylon, which focuses mainly on consumer banking, hopes to cater to this new and more affluent generation. The bank has incorporated its own IT company, invested heavily in telephone and Internet technology to serve customers cheaply, and expanded its ATM network.The bank is an active lender to small and medium- size enterprises and is a participant in the government’s and Asian Development Bank’s SME development program.
CHINATRUST COMMERCIAL BANK
Chinatrust spent much of last year clearing its balance sheet of bad loans and as of the end of 2002 had lowered its non-performing loan ratio down to under 2.5%. The bank has a stranglehold on the country’s credit-card issuance and has introduced a range of consumer loan products in a bid to become yet more retail-focused. Chinatrust acquired the Taiwanese personal loan portfolio of ABN and is working to forge strategic alliances with European financial firms to buy bad loans across Asia. Already the bank has a network of nearly 60 business offices around the world.
Jeffrey Koo, chairman and CEO
The largest bank in Thailand, Bangkok Bank’s recovery over the past two years has been emblematic of a return to stability for the country’s economy as a whole. For the first time in more than five years,the total loan book in 2002 was greater than the previous year. Full-year profits were down slightly on the previous year, at Bt6.27 billion.Total assets and deposits dropped slightly. Over the past two years, Bangkok Bank has restructured its operations to focus its business units on particular customer groups, has cut costs by centralizing administration and processing, and established new business centers with an emphasis on fostering relationship banking.
Chatri Sophonpanich, chairman