Cover Story : World’s Best Banks/asia Pacific





Armenias banking sector has largely consolidated, but it is still relatively trouble plagued. Even after so many problem banks have closed, HSBCs ability to provide banking services and products has helped it care out a third of the local banking market.

The bank is a joint venture, 70% owned by the international banking group with the balance held by local investors. HSBC Bank Armenias profitability has doubled in recent years, and it has maintained a firm control over costs, resulting in a return on equity exceeding 20%. Its effective treasury functions have also given it leadership in foreign exchange and dealing in government securities. Its leadership position is not assured, however , as some of the competition is catching up .

Nick Gilmour , CEO



The fifth largest bank in Australia, St. George may not boast the size of National Australia Bank or the formerly government owned Commonwealth Bank, but it certainly was the stand-out performer in the market over the past 12 months.

At fiscal year end in September 2003, St. George saw the biggest improvements across the board, and it has maintained this momentum in the first half of 2004. The bank recorded a 19% jump in profits to A$354 million (US$249 million) for the half year ended March 31, 2004, with net interest income up by 12%, to A$794 million.This reflects strong growth in lending and deposit vol-umes as well as stable margins.

St. George, under the strong leadership of CEO Gail Kelly, has made significant inroads in terms of market share over the past 18 months. Total lending receivables (on and off balance sheet) jumped 19% to A$64.4 billion in the first half of the financial year, with commercial lending up by 22% and residential loans rising 19%, to A$45.9 billion. Bad debts at St. George are comparatively low, at 0.10% of net receivables.

Gail Kelly, CEO



The International Bank of Azerbaijan has long been considered the top bank in Azerbaijan and not just for being market leader, with more than 50% of the countrys total banking assets. The bank has sustained its profitability and strengthened its balance sheet with the assistance of a syndicated commercial loan from an Austrian consortium headed by Raiffeisenbank.

Recent developments include branching into the growing insur-ance and reinsurance market by creating an insurance company IIC and expanding its Azericard credit card services and ATM network. Internet banking was introduced for the first time last year, and privatization of the governments 50.2% stake is likely.

Jahangir Hajiyev, chairman



While Bangladeshs state banks continue to struggle with the challenge of ongoing reforms, a number of its private commercial banks are doing rather well. Of these, Islami Bank stands out, boasting a further 38% increase in profits last year, to 2.2 billion takas ($37 million).A private commercial bank based on the Islamic Shariah, the bank has man-aged to increase its business while ensuring a higher spread between lending and deposit rates. Last year it reported an increase in total assets to 134.7 billion takas, from 80.9 bil-lion takas in 2002. Deposits increased to 70.5 billion takas, from 56.2 billion takas the preceding year.The bank also enjoyed a rise in export import business.

Abdur Raquib, executive president



Chinas banks are problematic: Despite significant reforms, they sustain a high ratio of non performing loans and low capital adequacy. Nevertheless, Bank of China stands out for its reforms. In 2002 BOC became the first Chinese bank to list its shares on an international stock market, in Hong Kong, ensuring greater transparency.

In 2003 the BOC reported modest gains: a pre-tax profit of 2.45 billion yuan ($296 million).This was in sharp contrast to its operating profit of over 57 billion yuan,as the bank channeled significant funds into its loan loss provisioning. The banks provisions coverage was up to 74.55%, improving its financial condition considerably. Non-performing loans, meanwhile, continued to fall down by 6.45% from 2002 to 15.92%.

BOCs return on assets sat at 1.27% in 2003,up from 0.32% the preceding year. Corporate deposits jumped 28% and savings deposits 22.6%.

Xiao Gang, chairman and president



TBC Bank wins the award not just because it is Georgias largest bank by assets but also because it has shown innovation in adopting technology.The result has been a dramatic increase in its deposit base and in the volume of real estate loans made to its customers.


After more than doubling its profitability in 2002,TBC Bank has put in another sparkling performance last year, with asset growth of 40%, a strengthened balance sheet and net profits up another 30%.Little wonder, then, that a 25% stake in TBC Bank has been taken by Soros Investment Capital, the investment group linked to the fabled financier George Soros.

Mamuka Khararadze, chairman



While HSBC has proved itself around the world, posting strong results for the group globally, Hong Kong re-mains its home market. HSBC domi-nates all areas from consumer bank-ing to cash management to forex and continues to bolster its presence in the territory.The past 12 months has seen the bank further increase its market share as it has raised the number of new accounts over the past 12 months and increased the number of credit cards it has issued.

The bank enjoyed a thoroughly im-proved climate in Hong Kong over the past 12 months, free from the threat of SARS a year earlier. The groups interim results for the first half of 2004 saw Hong Kong grab 25% of revenue, recording US$2,580 million in profits before tax. Fees and com-missions rose by 40% to US$904 million, representing an annual com-pound growth of 16% since the first half of 1999. Sales of unit trusts and capital-protected investment products reached record levels.Retail brokerage sales were also strong.

Stephen Green, CEO



ICICI Bank has emerged as Indias largest privately owned bank, follow-ing the merger in 2002 of ICICI Ltd and its commercial arm, ICICI Bank. As of December last year, it boasted 1.1 trillion rupees ($25.2 billion) in assets and a network of around 450 branches and offices and 1,750 ATMs. It leads the retail sector with 5.75 mil-lion customers. It also offers a wide range of financial services to corpo-rate clients, making strong use of its online presence in foreign exchange trading, cash management and trade services.

In the period April to December 2003, it reported a 36% rise in after-tax profits, to 11.8 billion rupees. Net interest income and fee income both increased by 41% year on year while retail assets rose a significant 85%, from 152.9 billion rupees in 2002 to 282.7 billion rupees in 2003.

K.V. Kamath, managing director and CEO



Bank NISP has shown itself well able to weather the challenges of the Indonesian economic climate. Last year it re-ported an 84% increase in net income to 170.7 billion rupiahs ($19.9 million) from 93 billion rupiahs in 2002.

The bank ensures it diversifies its business sectors,currencies, tenors and interest. The success of its strategy is reflected in its loans-to-deposits ratio, which sits at 77.53%, one of the high-est in the country.

The banks total assets reached 15.4 trillion rupiahs at the end of 2003. Meanwhile, the bank brought its NPL ratio down to 0.84% (from 1.67%), one of the lowest ratios in the country. Last year Bank NISPs return on equity rose considerably, to 18.81% from 13.42% the previous year. Return on assets increased from 1.52% to 1.68%. The bank opened 34 new offices in 2003, bringing its total to 134.

Karmaka Surjaudaja, chairman



Bank of Tokyo Mitsubishi continues to lead Japans behemoth banks even as its parent company, Mitsubishi Tokyo Financial Group, involves itself in a bitter tussle to buy the ailing UFJ Holdings, another of Japans biggest four banks. While analysts have viewed the potential merger with considerable circumspection given the overwhelming nature of UFJs bad loan portfolio that is all on hold now with rival Sumitomo Mitsui Financial Group making a hostile bid in August.

In any case, MTFG continues as the strongest banking group in Japan,with BTM performing strongly over the past 12 months.The group post-ed another set of robust results at the end of the financial year in March, with net income at 918 billion (US$8.39 billion). This represents a 352% increase from the previous year reflecting the groups rise in non-interest income and a decrease in non-interest expenses.

The group has also lowered its non-performing loans still further. Down to an impressive 4% last year, the groups bad loans fell to 2.68% in June this year. It largely reflects the improved economic environment in Japan, with the group upgrading its borrower categories for client com-panies.

Shigemitsu Miki, chairman Nobuo Kuroyanagi, president



Repeat winner Kazkommertsbank continues to expand rapidly and re-ward its shareholders which since last year include the European Bank for Reconstruction and Develop-ment (EBRD) with a 15% stake with enhanced profitability and a succession of upgrades from the leading credit ratings agencies. Last year saw another 10% plus rise in net profits.


The largest bank in Kazakhstan by both capital and assets, Kazkom mertsbank has a traditionally strong franchise among the countrys larger corporates. More recently it has been focusing on the fast emerging SME segment of the market. It is also expanding its range of retail services, including the relatively under-developed mortgage sector.

Nina Zhussopova, chair of management board



The largest bank in this Central Asian republics nascent financial services sector, AsiaUniversalBank (AUB) comes out on top because by making intelligent use of modern technology, including Internet banking and smart cards, it has leapfrogged the countrys infrastructure gap and thereby won a growing band of large international and domestic clients.

The banks primary focus remains international trade finance for mainly corporate clients, in support of which it has developed a strong correspondent network. But it has also gained a dominant position in debit cards and other moneytransfer platforms that can be used without hold-ing an account. These are a raging success, and AUBs asset base has more than quadrupled over the past two years.

Nurdin Akerovich Abdrazakov, CEO



Seng Heng Bank excels in its market, boasting a strong balance sheet and a broad range of services. Last year it recorded 26% growth in its unaudited net profits to 160 million patacas ($20 million) from 127 million patacas in 2002. This is its fourth consecutive year of growth as it weathered Macaus economic downturn.

Seng Heng Bank also enjoyed growth in its assets, up almost 3% to 17.4 billion patacas from 14.7 billion patacas.The bank continues to improve its market share while it pursues its strategy of promoting Macau as an offshore financial center.

Ho Hung Sun Stanley, chairman and managing director



Public Bank continues to benefit from its focus on small and medium-size enterprises. It posted a before-tax profit of 1.4 billion ringgits ($368 million) in 2003a 69% year-on-year increase. Meanwhile the groups return on equity (ROE) was 14%, up from 12.3% in 2002.

The bank saw strong growth in its assets last year, with the groups total loans and advances up by 8 billion ringgits, to 47 billion ringgits, while Islamic financing activity surged by 59%. Its NPL ratio fell to 1.9%, down from 2.4% the preceding year, while its parent company, the Public Bank Group,saw its NPL ratio fall to 2%.Its market capitalization grew by 70% in 2003 to 18.7 billion ringgits.

Teh Hong Piow, chairman



The Agricultural Bank of Mongolia (Ag Bank) is the main provider of fi-nancial services in rural Mongolia. The bank is a model of reform, having narrowly escaped liquidation in 1999. Since then, it has become the second-mostprofitable bank in the country and in March last year was privatized through international ten-der to H.S. Investments of Japan.

The bank acquired its 500,000th borrower in 2003, having begun its lending program in November 2000.The program focuses on small and mediumsize enterprises, consumers, herders and pensioners.The average loan size is below $1,000, but repayment rates are impressive, sitting at above 99%.

J. Peter Morrow, CEO



Habib Bank is Pakistans second largest commercial bank. It runs more than 1,400 branches in Pakistan, commanding a 20% market share. Overseas it boasts 48 branches with three subsidiaries. It also has two joint ventures, with Habib Nigeria Bank and Himalayan Bank, and a majority stake in Habib Allied International Bank based in the UK.

In what represents Pakistans largest strategic sale to date, the government sold a controlling 51% stake in the bank to the Geneva-based Aga Khan Fund for Economic Development. In preparation for the privatization, Habib underwent extensive restructuring. Last years figures showed strong performance, with pre-tax profits of $95.4 million, up from $71.3 million the year before.

Zakir Mahmood, president and CEO



The Philippines second-largest lender, the Bank of the Philippine Islands, is also the oldest bank in South East Asia. Last year it posted net earnings of 5.7 billion pesos ($101.5 million), up 10% year on year. This resulted in an increase in its ROE, up from 10.2% to 11.1% in 2003.

The bank reported a robust perfor-mance in its insurance operations profits doubled in the third quarter of 2003 as well as recording significant improvements in its asset management and credit card businesses. NPLs de-clined to 6.5% from 9.6% in 2002.

Jaime Zobel de Ayala, chairman



OCBC stands out for its strong per-formance over the past 12 months as it continues to grow its market share against two very strong contenders.

It has made great strides in proving itself in its home market following its merger with Keppel Capital in February 2002.The bank reported a net profit of S$559 million (US$328 mil-lion) for the first half of 2004, a rise of 46% over the preceding year. This was driven by strong growth in its fee and commission income, which jumped 37% to S$232 million.

David Philbrick Conner, CEO



While Shinhan Banks profits in 2003 fell 20% to 476 billion won ($417 mil-lion), down from 595.9 billion won the preceding year, it still excelled when compared to its fellow financial institutions in South Korea.


Shinhan looks relatively healthy due to its smaller exposure to the credit card industry.Last year saw its bad loan to total loan ratio widen to 2.2% from 1.42% while its delinquency ratio for consumer loans increased to 1.06% last year from 0.72% in 2002 and its corporate loans jumped to 1.51% from 1.14%.

Sang Hoon Shin,president and CEO



Commercial Bank of Ceylon excels in Sri Lanka. It is a forward looking bank, intent on becoming a regional player by the end of the decade. Group assets were up a stunning 50.3% last year to 110.3 billion rupees ($1.1 billion). Meanwhile, net profits rose 17.1% to 1.5 billion rupees.

While the bank has traditionally focused on the corporate sector, it has been making significant steps on the retail side as it brings new products to the market. Last year, total deposits grew by nearly 38% to 75 billion rupees.

Amitha Gooneratne, managing director and CEO



At a time when Taiwans corporates are heading for big business opportunities in China, Bank Sinopac has proven itself keen to respond, say market sources.

The bank has maintained its prof-itability, recording after-tax net income of NT$4.2 billion ($128 million) in 2003. At the beginning of 2004 the bank established a financial holding company with National Securities and Sinopac Securities.

Paul C. Lo, chairman



The Siam Commercial Bank recorded a strong performance in 2003.The banks profits jumped from a net loss of 12.5 billion baht ($320 million) in 2002 to a 12.5 billion baht net profit last year. Profits as well as total assets were at their highest ever, with the banks return on equity coming in at a lofty 20%.

Total deposits stood at 607 billion baht at the end of 2003, an increase of 39 billion baht from the preceding year. Meanwhile, NPLs continued to decrease to 90 billion baht last year, or 17%, down 30 billion baht from 2002.

Chirayu Isarangkun Na Ayathaya, chairman



State-owned market leader National Bank of Uzbekistan has been a key player in the economic liberalization and ongoing privatization programs in this fast-growing but still very centralized economy. The bank is going through a period of rapid change as it prepares for a 40% privatization slated for later this year.

The first bank in Uzbekistan to conform to International Accounting Standards (IAS), it expects to build on existing strong credit lines from the EBRD, the Asian Bank of Development (ABD) and others by directly tapping international markets. Last year its loan portfolio grew by nearly 40% while its client base grew by 20% thanks to an expanded range of services including Internet banking and an integrated card and ATM network.

Zainiddin Mirkhodjaev, chairman