World’s Best Banks 2023—Asia-Pacific

Banks push on as rates rise and bring a boost in interest margins.

“Resilient” would best characterize Asia-Pacific (APAC) banking in 2022, as credit quality remained largely robust for banks in those of the region’s constituent countries where increased policy rates allowed them to enjoy the positive effects of tighter money on net interest margins (NIMs).

Even in China and Japan, where easy money policies remained in place to the detriment of NIMs, the banking sector was resilient, thanks to diversified lending in the former and regional expansion in the latter. Digitalization and hyperpersonalization built on their gains during the pandemic, and super apps continued to blur banking functionality along lifestyle and payment lines. Neobanks have continued to snap at the heels of the incumbent franchises—35% of APAC respondents to an EY 2022 survey say they have a relationship with one—but the industry-transforming disruption they threaten failed to emerge last year.

China, Hong Kong, Macau and Taiwan

China’s mammoth state-owned banks operated last year against the profoundly inauspicious backdrop of a nationwide pandemic-induced shutdown, a distressed real estate sector and declining NIMs, which fell 10 basis points on average.

ICBC had a better year than its peers: Annualized NIM was a market-beating 1.9%, net interest income grew 3.2% and total assets rose 12.45%. As a result, after-tax profit clocked a respectable (under the circumstances) 5.2% increase.

The bank underlined its strategic significance to the Chinese economy by swelling the loan book, with a focus on critical areas including manufacturing, high-tech innovation, inclusive finance, the private sector, green finance and agriculture. In the first half of 2022, domestic loans increased by 2.6 trillion renminbi (about $380 billion), representing record growth in that product for the bank and topping local market share.

Hong Kong’s Bank of East Asia (BEA) had a challenging 2022, due to China-related headwinds, but proved resilient thanks to wider margins—NIM widened 28 basis points to 1.65%—and to improved operational efficiency.

Total operating income rose 10.3%, and the bank’s strong capital position enabled it to buy back 0.5% of its shares in the issue. As a result, BEA ended 2022 with impressive total capital ratios: Its Tier 1 capital ratio was among the highest in the region at 20.1%.

CTBC Bank bested its peer group in Taiwan last year in revenue, profit and capital scale, booking a 36% profit gain and an 11.35% return on equity (ROE). In addition, the bank impresses with its geographic reach: It has 152 outlets in 14 countries and regions, including 142 in APAC, 13 in Greater China and 28 in North America. CTBC continued the environmental, social and governance (ESG) journey it had begun over a decade ago, winning inclusion on the MSCI Taiwan ESG Leaders Indexes. Moreover, CTBC has fully embraced artificially intelligent machine learning, propagating innovation through its “human-machine collaboration” model via predictive and prescriptive data analysis.

Northern Asia

Japan’s biggest banking group, MUFG (Mitsubishi UFJ Financial Group), once again demonstrated in 2022 a disposition to grow through acquisitions and expansion outside Japan—primarily focused on APAC. Like other Japanese domestic lenders, it faces challenging demographic and interest rate dynamics at home. At the same time, MUFG built a war chest to fund future acquisitions via disposals.

Last year, the bank spent about $621 million to acquire Dutch consumer finance company Home Credit Group’s Philippine and Indonesian units, agreed to buy Nomura’s Thai securities business and launched a $300 million fund to invest in domestic startups in India. The group also sold its MUFG Union Bank in the US for $8 billion to focus on its wholesale business while building firepower for future cross-border M&A.

South Korea’s Hana Bank enjoyed ratings and outlook upgrades from Moody’s and Fitch in 2021, an achievement in the context of the Covid-19 upheaval, setting the scene for an auspicious 2022. Operating income increased by 16.3% while net income was up 5.9%, gains which did not get flattened by the base effect of Covid-19 as they had in 2021. Hana increased loans to the small and midsize enterprise (SME) segment by 6.2% and to large corporates by 9.9%, some 78% of which are fully secured. Noninterest income rose by 6.5%, boosted by Hana’s dominance of the trade finance and foreign exchange markets in South Korea, accounting for 34.1% and 46% of shares, respectively.


ANZ Australia booked a 16% rise in statutory profit last year and a solid 10.4% cash ROE while de-risking the group via the sale of the business in margin lending to Bendigo & Adelaide Bank and also separating its wealth franchise into the life business, which was sold to become Zurich Assure, and the pensions and investments and adviser businesses, which went to Insignia.

The digital bank bested its domestic peers with industry-leading rapid deposit growth. As a result, the home loan portfolio regained momentum after the negative impacts of policy rate tightening by the central bank eased.

Future growth prospects improved via the proposed acquisition of Suncorp Bank, which would add over one million retail customers to ANZ and was funded through a 3.5 billion Australian dollar (about $2.3 billion) equity offering, representing the largest M&A-related equity fundraising globally in 2022.

Meanwhile, ANZ New Zealand—the country’s biggest banking group—is favored with an impressive 20% gain in net profit thanks to a post-Covid surge in spending, a booming real estate market and a $235 million New Zealand dollar (about $146.4 million) profit booked on interest rate and foreign exchange hedges. Net interest income rose 10%, and expense increases were contained at 2%, thanks to the impact of an increased investment budget and inflationary benefits.

The Subcontinent

State Bank of India (SBI), the country’s largest lender by assets, showed impressive agility with its management’s nimbleness over the past few challenging years. In a local banking market notorious for concentration risk to corporates of questionable quality, SBI has been nurturing its retail segment. Some 42% of its loans are to retail customers, while it enjoys a comfortable 44.7% ratio of current account to savings account.

SBI had taken drastic action to reduce its nonperforming loans (NPLs), which stood at a hair-raising 10.9% when the Reserve Bank of India conducted its asset quality review in 2016, but had plummeted to 3.5% by last September.

Pakistan’s HBL bank operated like its local peers against an onerous tax backdrop, due to the country’s economic woes. Therefore, its performance in profit terms should be judged on its 24% rise in consolidated profits rather than the 3% fall registered after tax. The decline is based on retrospective taxation and a 10% rise in the effective tax rate for the country’s banks.

Commercial Bank of Ceylon is Sri Lanka’s only private sector bank to be designated by the central bank as a higher-tier Domestic Systemically Important Bank, which encapsulates the relative advantage it enjoys versus local peers. It boasts stable liquidity and strong capital buffers. The bank entered 2022, and the profound challenges the year inflicted on Sri Lanka’s economy, fully battle sharp. Total assets swelled 19%; ROE bested the industry, hitting 10.7% last year; and after-tax profits rose 22.4%.

Nepal’s Rastriya Banijya bank showed impressive agility with a 37.5% gain in net profit last year, an achievement in the context of an 8.6% fall in deposits. As a result, NIM increased by 17% and NPLs declined by 35% to just 2% of the loan portfolio.

In Bangladesh, City Bank continued its operational transformation in 2022. It strengthened its digital retail offerings via the “Digital Nano Loan,” the Citytouch app and Islamic DPS Savings, focusing on the increasingly significant Shariah-compliant market segment. These developments helped City Bank secure the win for a third year.

Southeast Asia

Singapore’s DBS won dual titles this year for the Best Bank in the Asia-Pacific region as well as ticking all the relevant boxes for the fifth year as Best Bank in Singapore in what the bank describes as a “breakout year,” during which net profit hit a record 8.2 billion Singapore dollars (about $6.1 billion)—a 20% improvement on 2021—for a stunning 15% ROE. Total shareholder return on DBS stock on a five-year annualized basis was 18%, representing one of the best returns across the top 50 global banks.

DBS frames itself as a “34,000-person startup” and has been recognized by Fast Company magazine as among the 100 Best Workplaces for Innovators in 2022. And the bank’s ecosystem strategy, rooted in the digital transformation it kicked off in 2014, has allowed it to scale up in big Asian markets without high customer-acquisition costs.

An ESG milestone in 2022 was the announcement of landmark decarbonization commitments across nine sectors, including oil and gas and real estate, which will allow DBS to meet its 2050 net-zero targets, among the most comprehensive across the global banking industry.

Meanwhile, Public Bank (PB) recorded the highest ROE from Malaysia’s banking sector last year—12.4%—while also enjoying the most efficient cost-to-income ratio: At 32.6%, it was almost 5% lower than its closest rival and a main contributor to that impressive ROE, testifying to PB’s focus on risk management and productivity in the post-pandemic era.

At the same time, the bank launched dedicated green financing facilities for green and environmentally friendly loan purposes, with 620 million ringgit (about $141 million) disbursed under the program last year. In addition, a low-carbon transition facility, social agenda financing and an ESG exclusion list compilation also boosted PB’s sustainability credentials.

Besides chalking up a stunning 67% profit gain last year for a 17.5% ROE, Bank Rakyat Indonesia (BRI) also made significant progress in the ESG stakes, issuing sustainable environmental bonds with use of proceeds earmarked for funding renewable energy, pollution control, natural resource management and biodiversity.

The bank’s digital platform was strengthened via BRImo New Look’s rollout in 2020, which bundles internet banking, mobile banking and e-money functionality on one platform. BRI also initiated loan restructuring programs and increased focus on its core business arena—micro, small and midsize enterprises (MSMEs)—by increasing lending to the sector by 82.7%, funded by low-cost deposits.

For the fifth year in a row as the Best Bank in the Philippines, BDO Unibank enjoyed leading market positions across a range of data points last year, including total asset growth, capital adequacy and trust assets. Net income attributable to shareholders was also a market-topping 40 billion Philippine pesos (about $731 million). Return on average common equity was a solid 12.4%, with the third quarter pulling in record inflows of 16 billion pesos.

BDO’s status as a formidable industry leader—thanks to a diversified business franchise and extensive distribution network—remains as solid as ever. It is a leading player across multiple business segments, including investment banking, private banking, microfinance, remittances, credit cards and insurance brokerage.

Siam Commercial Bank (SCB) reaped the rewards of rising interest margins in Thailand last year on policy rate hikes. As a result, it restructured balance sheet loans, turbocharging consolidated net profit by 52%.

Although SCB is now part of a group structure, finalized after regulatory approval in September, under the “SCBX mothership,” which aims to transform the total enterprise into a diversified high-tech venture, agencies viewed the new structure as credit neutral. SCB will be the core engine for SCBX.

The bank has a keen eye on the growth potential of its wealth management franchise, having teamed up with Switzerland’s Julius Baer in Asia’s first wealth management joint venture, in 2018. This enables it to serve the country’s rising ultrahigh-net-worth population based on Baer’s open product platform, which gives SCB’s Thai client base access to cross-border financial products.

Vietnam’s HDBank (HDB) has a unique business model within Southeast Asia. It allows cross-selling leverage to its more than 30 million customers within an ecosystem comprising the bank, consumer-finance wing HD Saison and Vietjet Air. Although HDB’s NIM was a healthy 5.2% last year, it boosts interest income via the cross-sell fees derived from that ecosystem. Return on average equity was an impressive 23.5% in 2022.

Brunei Darussalam’s Baiduri Bank strengthened its HR capabilities in 2022 by implementing SAP’s SuccessFactors cloud-based human capital management system, and via initiatives such as its Leadership Academy and Emerging Leaders Mentoring Programme, underpinned by a commitment to employee wellness. In addition, corporate social responsibility engagement was deepened through the “Zero to Hero” school workshops on low-impact living. As a result, ROE flatlined at 12.4% due to rising NPLs and gains in the cost-to-income ratio; but total asset growth powered ahead by 14.4%, Tier 1 capital by 9%, and net profits by 9.4%.

Despite the political upheaval ushered in by 2021’s military coup and the economic disruption caused by the pandemic, Myanmar’s UAB bank operated on a trajectory of resilience and positive momentum. Revenue growth was strong in the retail and SME segments; and the bank actively explored other revenue-generating enterprises, including investment banking, securities trading and insurance. As a result, UAB enjoyed, at 31%, the lowest cost-to-income ratio in the Southeast Asian banking industry. This enabled a solid 26.5% growth in operating income last year.

Cambodia’s ABA Bank increased its overall customer base by a stunning 21% in the first half of last year. It continued to participate in the SME cofinancing scheme—a government initiative to provide affordable loans to SMEs. ABA’s second-half profits were up 40% year-on-year. The bank also became the first Cambodian commercial bank to issue corporate bonds for 84.8 billion Cambodian riels (about $20.9 million).

“The continuous growth of the customer base and sound financial performance reflects the bank’s strategy effectiveness and strong position in the financial sector,” said ABA Chairman Yves Jacquot, in announcing second-quarter results last August.

Central Asia and the Caucasus

AIB (Afghanistan International Bank) rode over the country’s reams of problems via the bank’s unique status as the only US dollar clearer. As a result, it managed to stay open through most of 2021’s regime change, and the bank remains a vital access point to multilateral lenders and nongovernmental organizations. Through the upheaval, AIB retained 14.9% capital adequacy and booked more than 300% after-tax profit last year, a measure of its uniqueness in an upended financial landscape.

Mongolia’s Khan Bank accounts for 33% of banking system assets in the country, and its metrics are preeminent: Total loans last year were more than double those of its closest competitor, as were profits. The bank “pioneered mobile banking in Mongolia in 2007,” according to Euromoney, by introducing a mobile banking app in 2013, with remarkably successful results. Some 47% of the population uses Khan Bank’s digital platform. Last year, 96% of mobile transactions in the country used the app.

Kazakhstan’s banking system was pressured last year due to the economic impacts of international sanctions on Russia and to China’s slowed economy. Nevertheless, ForteBank managed to perform well against this backdrop, growing assets by 14.8% and profits by a chunky 53%, with its improved metrics earning credit upgrades from S&P, Moody’s and Fitch.

Pasha Bank is Azerbaijan’s largest private bank by total equity. It focuses on non-oil sector lending, including agriculture, transportation, construction and retail, and is a major driver in helping diversify the country’s economy. Assets rose 17.4% in the financial year, and profits rose by 7%.

Kapitalbank (KB) is Uzbekistan’s largest private bank and last year became part of the Uzum Group’s ecosystem. Uzum is a joint project bringing together the assets and expertise of more than 10 key entrepreneurs and investors in Uzbekistan. Apelsin, KB’s digital bank, in November joined the ecosystem and changed its name to Uzum Bank.

Kyrgyzstan’s KICB benefited last year from a European Bank for Reconstruction and Development loan to boost lending to MSMEs in the country. The bank’s profit in the nine months to September was 1.1 billion Kyrgyzstani som (about $12.6 million).