Taiwan's best corporate and investment bank 2020: CTBC Bank
Taiwan’s 23 million citizens are served by nearly 40 banks, ensuring a hard fight for clients in both retail and corporate banking. But CTBC has managed to pull ahead of the crowd in both fields.
CTBC, Taiwan’s largest private sector bank, increased its revenue, profits and total assets in 2019 to NT$103.7 billion ($3.5 billion), NT$38.5 billion and NT$4.23 trillion, respectively. It did that despite an increasingly uncertain backdrop for Asian banks.
The spread of Covid-19 is the obvious problem facing banks at the moment, but it is not the only one. The on-again, off-again US-China trade war has also been a concern for Asian banks over the last few years, even more so for an institution that is leading the charge offshore for Taiwanese banks.
CTBC’s approach to navigating trade war uncertainty has begun with trying to understand its clients. The bank ran a survey of Taiwanese companies last year and found that 20% of those with overseas businesses were relocating operations, either back to Taiwan or to safer locations, such as Hong Kong and Singapore.
The bank established a dedicated task force to advise clients, dealing with various regulatory issues as well as domicile changes and providing overall support: that helped it to increase its international business by about 13%.
CTBC also fared well in the first quarter of 2020, despite the impact of the coronavirus. The bank, run by chief executive James Chen, managed to boost net profit for the quarter by 8% year on year.
One source of income was an increase in demand for credit from its less risky customers, who saw the Covid-19 pandemic as an opportunity to double down on investments in the capital markets.
In retail banking, CTBC is keeping pace with its competitors. The bank has partnered with e-payments and e-ticketing providers, linked its ATMs with Taiwan’s most popular messaging app Line and, as one of Taiwan’s largest credit card issuers, it is doing away with paper bills and redesigning its systems to provide mobile billing – still a new concept in an economy that was slow to accept digital and mobile banking.
About 39% of CTBC’s retail customers, or 3.4 million, are also online customers. Those customers account for roughly 71% of its total retail banking revenue.
CTBC’s international aspirations have broken the mould of Taiwan’s domestic-focused banking system. The bank has already built a network covering 14 countries, which it continues to expand: earlier this year it opened a new Chinese branch in Shenzhen.
Its overseas operations contributed about NT$12.6 billion, or 38%, of its 2019 profit, up 12% from the year before.
CTBC’s domestic business and overseas network have helped it to develop one of the most prominent positions of any Taiwanese bank in Asia’s syndicated loan markets. It worked as a mandated lead arranger and bookrunner (or MLAB), or mandated lead arranger on 78 transactions between April 2019 and March 2020: 53 of those were offshore deals.
Three of the international syndicated loans sold were led by CTBC: a $340 million deal for CMB International Leasing Management; $120 million for CMB Financial Leasing (Shipping Finance); and $100 million loan for Haitong Unitrust International Leasing.
Among the bank’s domestic loan mandates was an MLAB and joint adviser role on the NT$89.4 billion CIP Changfang Wind Power and Xidao Wind Power project financing. The deal, completed in January 2020, is the largest debt package yet for Taiwan’s burgeoning wind power sector.
CTBC was also sole MLAB and agent for a NT$31.2 billion leveraged buyout loan for KKR’s acquisition of Taiwanese company LCY Chemical Corp, the largest LBO in Taiwan in 2019.
The bank has worked in leading roles on a host of international and domestic bond issues, notably a series of green bonds last year, including a pair of deals by Danish power company Orsted denominated in new Taiwanese dollars.
With a dominant position in its home market and a growing overseas network, CTBC is following its goal of being a ‘Taiwan champion, Asia leader’.