Global Finance’s best investment banks posted robust numbers, despite signs of slowing in the global economy.

Author: Rob Daly

Overcoming geopolitical uncertainties and stronger interest-rate headwinds, UBS held onto its title as Global Finance’s Best Global Equity Bank.

UBS generated $4.3 billion in net profits in 2019, down from $4.9 billion in 2018, as it integrated its equities, foreign exchange, and credit-trading business lines into one division. It also boosted its investment in equity research and enhanced its data science offering under its EvidenceLab brand.

“Volatility—a key driver of revenues, particularly for our institutional business—remained muted and ended the year near historic lows,” said Sergio Ermotti, Group CEO, during the bank’s fourth-quarter earnings call. “Late in the year, recession concerns in the US abated and investor sentiment improved, supported by progress on global trade discussions and Brexit, while US equity markets reached all-time highs.”

Granted, all bets are now off as the COVID-19 pandemic slams the global economy. Our 2021 Best Investment Banks will almost certainly be judged, in part, by their ability to respond and adapt to the crisis.

North America: Traditional Distinctions Erode

Citi claimed the title of Best Investment Bank in North America for 2020, with its equity markets business generating $2.9 billion in revenue last year. Over the same period, the bank combined its equities, prime brokerage and securities operations into a single business line to provide more streamlined services to clients.

Citi also committed resources to drive IPOs from industry verticals such as edge cloud computing, electronic exchanges, security software and data analytics, says Paul Abrahimzadeh, co-head of North American Equity Capital Markets at Citi.

“We have been a leader in products such as SPACs [special purpose acquisition companies] and convertible bonds,” he told Global Finance. “Citi’s nimble and innovative approach is the key characteristic that keeps our North American equity capital markets franchise at the forefront of evolving issuance trends.”

These moves also highlight the extent to which historical divisions and categories are blurring with the expansion of private investing, direct listings and new approaches to IPOs, notes Russell Chong, Abrahimzadeh’s co-head of North American Equity Capital Markets. “We continue to see compelling, disruptive companies coming to market,” he says. “These issuances require that we bring the right cross-functional expertise to each situation without regard to traditional silos or dogmatic approaches.”

Europe: Growth in a Slow Market

Across the Atlantic, Crédit Agricole won as Best Investment Bank in Western Europe. CA’s corporate and investment banking business produced 38% growth in net income in its fourth quarter and 8.6% growth over the full year. The bank attributes that growth to dynamic sales within capital market and its investment banking activities, despite the absence of significant deals.

Our Best Investment Bank in Central & Eastern Europe, once again, is Halyk Finance. The Kazakhstani bank generated 251 billion tenges ($614 million) in the first nine months of 2019, for a 53% increase compared to the same period in 2018. Fitch, meanwhile, acknowledged the overall improvement the bank made over the past year, raising its rating from BB to BB+ at the end of 2019.

“Recognition at the international level testifies to the strengthening of Halyk Finance’s leadership in the competitive investment banking market and is an extraordinary achievement for the entire industry in Kazakhstan,” says Talgat Ayupov, CEO of Halyk Finance.

Asia-Pacific: Record Listings

Siam Commerical Bank retained its title as Best Investment Bank in the Asia-Pacific Region, with a 2019 pre-provision operating profit of 95.6 billion baht ($2.9 million), up 30% year-on-year. The growth occurred while Thailand’s GDP fell to 2.4% from 4.2% the previous year—a result of the global economic slowdown, increased US-China trade tensions and the baht’s steep appreciation. Government stimulus measures and a rebound in tourism helped buoy GDP in the second half, according to bank officials.

SCB played a crucial role last year in Asset World’s IPO, the largest IPO in Thailand’s history at the time of listing. And it advised on Global Power Synergy Company’s (GPSC) acquisition of Glow Energy from France’s Engie, the largest acquisition within the Thai energy sector to that time.

“Siam Commercial Bank prides itself on its expertise and ability to execute a wide array of transactions,” says Veena Lertnimitr, executive vice president of Siam’s Investment Banking Function, “with 2019 being no exception.”

Latin America: Modernization and Cost Control

In Latin America, Itaú Unibanco scored as the Best Investment Bank. The Brazilian bank managed consolidated year-on-year net-income growth in 2019 of 10.2%, or 28.4 billion Brazilian real ($5.5 billion), with a 23.7% return on equity.

“This performance was driven by a robust credit expansion of 10.9%, with a positive impact on our net interest income,” Candido Botelho Bracher, president and CEO, said during Itaú Unibanco’s fourth-quarter earnings call. “Our fee income grew substantially above inflation. On the same token, our cost-control initiatives and constant investment in modernizing our infrastructure generated our biggest efficiency gain over the last four years.”

Middle East: A Winning Strategy

First Abu Dhabi Bank made a return as Best Investment Bank in the Middle East. Parent FAB Group’s net profit rose 4% to 12 billion UAE dirhams ($3.3 billion) year-over-year in 2019.

“Last year marked another year of growth for FAB, despite challenging market conditions regionally and internationally,” said bank chair Sheikh Tahnoon Bin Zayed Al Nahyan in a statement. “The group’s solid financial results for the full year of 2019 are a testament to the strength of our leading corporate and retail businesses, and demonstrate clear progress in our strategy as we continue to better serve our clients.”

The bank’s global markets business set a record of 33% revenue growth, achieving strong performance “on the back of increased client flow, new client relationships and enhanced cross-sell across FAB’s global network,” said Abdulhamid Saeed, group CEO of FAB, in the same statement. “Distribution of GM products to clients internationally hit a new high in 2019, driven by foreign exchange, rates, and commodity hedging.”

Africa: IPO Expansion

In Africa, EFG Hermes repeated as Best Investment Bank after a busy 2019. “EFG Hermes ended the year as the number one broker in most of our traditional MENA markets, while capturing the top three positions in newly entered Sub-Saharan Africa markets,” says Karim Awad, group CEO of EFG Hermes.

In the past year, the bank advised and acted as a bookrunner for the $29.4 billion Aramco IPO on the Saudi Stock Exchange (Tadawul), as well as 21 other transactions, including mergers and acquisitions.

Other IPOs included the 1.64 billion Egyptian pound ($104 million) launch of payments specialist Fawry on the Egyptian Exchange, and the £288 million ($332 million) initial offering of telecom-infrastructure provider Helios Towers and £1.2 billion launch of payment-network operator Finabir on the London Stock Exchange.

EFG Hermes also extended its presence to Southeast Asia in 2019 via a partnership with Vietnam’s Asia Commercial Bank Securities, the trading arm of Asia Commercial Bank.

BEST EQUITY BANKS 2020

Category
Bank
North America Citi
Western Europe Crédit Agricole
Central & Eastern Europe Halyk Finance
Asia-Pacific Siam Commercial Bank
Latin America Itaú Unibanco
Middle East First Abu Dhabi Bank
Africa EFG Hermes