Features : The Best Emerging Market Banks 2006

In our 13th annual survey of top banking performers in emerging markets, we name those banks that are turning in the best performance for both their shareholders

and their customers.

Emerging markets continue to present both opportunities and challenges for investors, and nowhere is this better reflected than in the area of emerging market banking. Emerging markets are evolving at a rapid pace and so too are the banks that cover these markets. Consolidation is a strong theme this year as domestic banks look to grow not only organically but also by acquiring the assets of other banks to boost their capital base both at home and abroad by allowing them to enter new markets. Consolidation is likely to remain a constant theme in coming years, as a number of markets, particularly in Asia and emerging Europe, arguably remain overbanked.

Technology in the form of IP-based technologies, Internet banking and electronic payments is being implemented across most emerging markets in an effort to provide customers, both retail and corporate, with new and more efficient ways of interacting with their banks. Many of the banks that stand out in this years survey are those that have used technology to leapfrog their competitors, reduce costs and provide their customers with state-of-the-art facilities.

With input from industry analysts, corporate executives and banking consultants, Global Finance identified winning banks based on a number of criteria including growth in assets, profitability, customer service, product innovation and acceptance of international corporate governance standards.

This years winners are not necessarily the biggest players in each market but are those that continue to innovate in terms of customer service, deployment of technology and the development of new financial products. Through technology and product innovation, this years winners have also maintained or extended their market share, opening up new sources of revenue. They have also been effective at reducing costs as an overall proportion of their income, as well as non-performing loans (NPLs), which remain a key challenge for many emerging market banks. But even in markets such as China, where NPLs historically have been high, we have focused on those banks that have made significant inroads into reducing the risk and capital drag of NPLs on their balance sheets.

This years winners also stand out in terms of their ability to grow fee, commission and interest income.

Anita Hawser

See owr award winners