Asiamoney Best Bank Awards 2017: Taiwan
Best domestic bank: CTBC Bank
|Chao Chin Tung
CTBC Bank is a worthy winner of this award. The Taipei-based lender is still finding its feet in the region through its subsidiaries in Indonesia, Vietnam and Japan and a growing network of branches spanning 10 Asian cities. In March, its parent, CTBC Financial Holding, bought a 35.6% stake in Bangkok-based LH Financial Group, paying Bt16.6 billion ($480 million) and marking the first big investment in Thailand by a Taiwan lender.
But it is in its home market that CTBC, under chairman Chao Chin Tung, really shines. It is the island’s most valuable lender. In 2016, it reported pre-tax earnings of NT$28.9 billion ($959 million) on net revenues of NT$87.9 billion, while consolidated pre-tax return on equity hit 11.89%.
CTBC is also big where it matters: it boasts more ATMs than any of its peers, and has more mobile and internet banking users; and in a market where prime investment banking transactions are fought over tooth and nail – unsurprising, given that the island boasts 39 full-service commercial banks – CTBC regularly leads its peers in M&A and equity capital markets rankings.
It is also something of a rarity in Taiwan: a bank prepared to think innovatively and with care as it searches for new ways to serve its corporate and retail customers. It launched a new digital bank in 2016, as well as unveiling an innovation lab that targets new blockchain inventions.
Best corporate and investment bank: Yuanta Securities
Yuanta Securities, under CEO Arthur Chen, has been a leader in this field for years. In its worst years, it remains competitive; in its best years, it out-guns the rest of the field.
Companies seeking to tap Taiwan’s markets for fresh capital gravitate toward Yuanta Securities – for good reason. A dominant force in the world of Taiwan securities since its formation nearly 60 years ago, Yuanta served as lead manager on 22 domestic initial public offerings in 2016, running stock sales for Crown Bioscience International, Tai-Shing Electronics and skincare specialist Dr Wu. It also dominated the market for follow-on offerings, with a 29.4% share in 2016, streets ahead of its nearest rival.
During the year, it helped Taiwan Mobile complete the sale of NT$10 billion ($330 million)-worth of convertible corporate bonds, the largest onshore convertible print in nearly a decade. And in December 2016, it helped Cathay Financial Holding to complete its long-planned NT$49.9 billion sale of preferred shares – the most money ever raised in Taiwan’s secondary market.
Yuanta Securities remains a powerful player in domestic mergers and acquisitions too: in January, it acted as sole financial adviser to connector maker Bizlink during its successful takeover of electrical wiring firm Leoni. Yuanta also remains a big player in the quieter reaches of the capital markets, most notably in private placements – where it led the field in 2016 – and block trades.
Best international bank: Citi
No foreign bank comes close to competing with Citi for this award. The US lender comes top regularly on every conceivable metric.
Scale? Tick – Citi, under country head Paulus Mok, boasts 56 branches dotted across the island, with a staff of 4,000. Credit cards? Another big tick, given Citi’s continued bragging rights as the leading onshore credit-card issuer, with the highest activation rate and per-card spending rate. What about wealth management? Tick again. Citi introduced the concept to the island, and remains one of the leaders.
It is well capitalized – recording returns on assets and equity of 1.27% and 10.57% respectively in 2016 – as well as profitable, reporting earnings before interest and taxes last year of $311 million. Its operational remit stretches across the financial sector, from cash management to trade finance, and treasury services to investment banking.
The latter forms another rich seam of revenues for Citi. It is a leader in the local debt markets, having helped seven global lenders and corporates to issue dollar-denominated formosa prints since the start of 2016.
When any corporate or investor is mulling a large acquisition on Taiwan’s shores, Citi is usually one of the first financial institutions to receive a phone call. The bank advised on four big M&A deals in 2016 and guided Advanced Semiconductor Engineering through its $3.3 billion merger with Siliconware Precision.
Best bank for SMEs: E.Sun Commercial Bank
Every now and then, a lender emerges that sees the market a little differently. E.Sun Commercial Bank is one such case: a relatively young (founded in 1992) financial institution with driven and capable senior management.
With just 135 branches across the island, it is dwarfed by Taiwan’s big commercial banks. But that matters little to an institution that long ago realized there was money to be made banking thriving young domestic firms operating onshore and around the world.
Unlike its peers, many of which pay lip service to small and medium-sized enterprises, E.Sun’s focus has long been on providing first-rate solutions to smaller corporate clients, ranging from transaction banking to cash management to treasury services. E.Sun claims to be one of Asia’s best SME banks – a bold assertion, but one that its peers in Taipei grudgingly admit might not be too wide of the mark.
“They are very good,” one leading bank executive told Asiamoney in Taipei. “Ignore size. To my mind, they’re one of the country’s best banks, and they’re going to get better.”
Total outstanding loans to smaller firms at the end of 2016 stood at NT$294 billion ($9.8 billion) – up 11.8% from a year ago – making E.Sun the island’s biggest private-sector SME lender. This growth has not come accidentally: the lender works assiduously to generate new products that help clients and add heft to its bottom line. An example is its collaboration with insurers to offer micro-insurance products to underprivileged groups. This is a really good SME lender – but also a very good all-round bank whose best days are yet to come.
Best digital bank: Richart, from Taishin Bank
Taishin Bank has worked hard to craft a new digital offering tailored to the next generation of spenders, investors, savers, homebuyers and young entrepreneurs. Its brainchild can feel a bit hit-and-miss at times. Do young users of Richart really enjoy logging on to a website that features an endearing but irritatingly omnipresent cartoon dog?
But this is a quibble, as the overall look, design, feel and sensibility of this project should not be dismissed. Knowing that young people shy away from visiting physical branches, Taishin launched this product in April 2016 as a new digital bank for a brave new digital era, aimed squarely at customers aged 25 to 40.
It has been a hit: 90,000 people with an average age of 35 applied for a Richart savings account within the first 11 months, 70% of which were new customers to Taishin.
The parent describes it as the island’s “first and biggest pure-digital bank”, designed specifically to be used by the young, busy and above all mobile customer.
Richart acts as a financial channel under senior vice-president Christy Shyy, suggesting deposit services, credit cards and investment options to young clients, and giving them handy tips on how to save for the future. It also educates, helping newcomers to understand financial terms. Richart’s overseers promise to listen to the customers, holding regular seminars and workshops.
If this is the future, it isn’t half bad.
Best bank for CSR: CTBC Bank
This award can often be hard to judge. What, after all, constitutes excellence in corporate and social responsibility? For their part, banks are often keen to stress their fluffy, giving side, while neglecting to trumpet the way their actual financial services benefit themselves and their clients.
So it is a pleasant surprise to find a lender getting the balance and the mix right. CTBC Bank proves its willingness to help the world around it, spearheading an anti-drugs campaign that reaches out to 60,000 citizens. Its Light up a Life campaign, which helps disadvantaged children, continues to do great things. First launched in 1985, it has raised billions of dollars and, along the way, helped nearly 400,000 people.
CTBC has also been active in helping green companies to pursue initial public offerings at home and abroad, while investing directly in green corporates and industries. It was the first Taiwan lender to launch a credit card specifically designed to support people trapped on lower incomes or in welfare and it pioneered the industry’s original drive into paperless services.
When it comes to CSR, there is little that CTBC has not promoted, pioneered or invested in. It is the worthy winner of a worthy award.
Best private bank: E.Sun Commercial Bank
E.Sun Commercial Bank has received praise for its efforts in providing high-end banking services to Taiwan’s army of small and medium-sized enterprises – the lifeblood of this island economy. But the mid-sized private lender also deserves plaudits for the speed with which it has become an important player in the fast-growing world of private banking.
E.Sun has opted for a thoroughly different approach here, paying its sales team a yearly bonus rather than incentivizing them with commissions – a strategy that, the bank believes, avoids potential mis-selling. It loudly trumpets equal opportunities – an attitude that seems to work: in the four years to the end of 2015, its private banking division saw fee income grow at a compound annual rate of 35% – faster than any of its peers.
More specifically, over the same period, the bank’s wealth management fee income expanded at a compound rate of 37.5%, transforming E.Sun into one of Taiwan’s top three private banks.
Despite market volatility and recent rule changes that crimped growth across the wealth-management sector, E.Sun still saw fee income grow by 12.4% in 2016. And still the bank continues to innovate, rolling out customized cross-border private banking services to its VIP customers – anyone with personal liquid assets of more than $10 million – while finding new ways to extend well-packaged services to its younger and mass-affluent clientele.
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