Asiamoney best bank awards 2018: Thailand
Best domestic bank: Kasikornbank
It has been a tough year for Thailand’s leading commercial banks. A combination of sluggish loan growth, the high cost of rolling out digital platforms and continuing credit problems – especially for small and medium-sized enterprises – led three of the big four banks to report lower profits for 2017.
Against that less-than-favourable backdrop, most analysts had little difficulty in picking the standout winner. Despite its well-known problems with SMEs, Kasikornbank, led by chief executive Banthoon Lamsam, continues to benefit from its proven management team, its network of 1,032 branches built up over 70 years, as well as its innovative products and growing digital banking presence.
KBank, the country’s third-largest bank by assets, reported first-half net profit of Bt21.6 billion ($651 million) this year, an increase of 13.2% over the same period in 2017. Return on equity was an impressive 12.2%, compared with 8.52% at Bangkok Bank and 7.19% at Krung Thai Bank. KBank’s net interest margin of 3.4% continues to surpass that of its peers thanks to its focus on growing retail and SME loans.
“KBank is well run and generally on the cutting edge,” says one senior bank analyst. “It has been challenged by SMEs, but this is part of the normal business cycle, and as the cycle improves, so will KBank’s SME portfolio and earnings.”
KBank has other strings to its bow. It is the market leader in mutual funds through Kasikorn Asset Management, with 20% of the market as of the end of May. It is one of the top names in debt capital markets, with 19 deals valued at $1.67 billion for the first six months of this year. And on the IT front, KBank continues to be a mover and shaker. The bank’s mobile banking app K Plus boasts more than eight million users and is slated to reach 10 million by the end of December.
Best corporate and investment bank: Siam Commercial Bank
When Asiamoney asked a handful of senior bankers to nominate the best corporate and investment bank in the country, several names cropped up as being good candidates for the award. Credit Suisse undoubtedly had a strong claim, with its large number of equity-linked offerings and its strong M&A advisory capabilities. Bualuang Securities, a subsidiary of Bangkok Bank, also won accolades for the large number of equity capital markets transactions it has done.
But across the full range of businesses, a clear winner emerged: Siam Commercial Bank, Thailand’s oldest domestic bank.
SCB, for whom Wasin Saiyawan is head of corporate banking, ranked first among banks in the ECM league tables during the award period, with 12 transactions, worth $2.05 billion. It also ranked second in DCM and second in loans.
A quick look at a recent deal list also reveals its strength and market presence. Take the landmark $1.7 billion Digital Telecommunication Infrastructure Fund offering, completed in May. SCB was the sole financial adviser for this complex asset acquisition, which was the largest offering in southeast Asia during the 12-month period. The transaction was split into two phases: the first was debt financing of approximately Bt13 billion ($392 million) and the second successfully raised over Bt53 billion in equity.
This is not the only stand-out deal for SCB. It acted as joint financial adviser and bookrunner on Gulf Energy’s Bt23.9 billion IPO, completed in late November. This was the largest IPO offering in Thailand in 13 years and the biggest-ever IPO raised from the Thai private sector. It was successfully executed despite the relatively difficult timing of the issue, which coincided with the funeral of King Bhumibol. To round it off, SCB was involved in four M&A deals worth $424 million in total, making it a worthy winner of this year’s award.
Best international bank: Citi
In a banking landscape divided between large domestic banks, large international banks and hybrids, Citi Thailand, under country head Darren Buckley, stands out as something a bit different. A truly global bank, it also boasts a large retail presence, made up of three full service branches and 32 Citi network branches that provide a complete range of consumer banking, credit card and foreign exchange services to over one million customers. Then there is Citi’s formidable network of corporate clients, ranging from multinationals and financial institutions to public sector and local conglomerates.
“For today’s world, you need global solutions,” chief executive Tibor Pandi tells Asiamoney. “The ability to deliver these products to the local market is what makes Citi unique.”
With a presence in Thailand dating back more than 50 years, Citi clearly has plenty going for it. It is one of the most profitable foreign banks in the country. And in March, Citi acquired Tisco Bank’s unsecured personal loans portfolio and credit card business, projected to include $150 million in receivables. This should ensure further business growth in Thailand’s consumer market.
During the reporting period, Citi had several standout deals. In July 2017, the bank acted as joint global coordinator and joint bookrunner for PTTEP’s $500 million perpetual bond issue. This was well received by investors, with the final order book oversubscribed 2.5 times. In January, Citi also acted as joint bookrunner for Kasikornbank’s offering of $400 million of senior unsecured notes.
Best private bank: Credit Suisse
When it comes to private banking in Thailand, two names stand head and shoulders above the competition: Credit Suisse and Phatra Securities, a member of Kiatnakin Phatra financial group. Both are leaders in the field. But while Phatra is known as the pioneer of Thailand’s onshore private wealth management service, Credit Suisse is a global bank that offers both onshore and offshore wealth management services to wealthy individuals, families and entrepreneurs, including a large percentage of the names on Forbes’ list of Thailand’s 50 richest people.
Better still, Credit Suisse’s integrated banking platform means that high net-worth and ultra-high net-worth clients gain access to the group’s full suite of investment banking and wealth management services via its regional private banking hub in Singapore.
Thippa Praneeprachachon, head of wealth management in Thailand and a 30-year veteran of the industry, tells Asiamoney this approach sets the bank aside from the competition.
“The ‘one bank’ concept is very important to our success,” she says. “Our equity, investment banking and private banking teams work together to provide concrete solutions for our clients.”
Although Credit Suisse only wheeled out its wealth management platform in Thailand in May 2016, the bank has had a strong presence in the country for nearly 20 years. It is one of the few bulge-bracket investment banks with fully licensed brokerage operations and on-the-ground teams in equity sales and trading, research and investment banking. At a time when it is hard to recruit good people who understand the Thai market, Credit Suisse also stands out with its team of 40-odd private bankers, who on average have more than 10 years of experience.
No surprise then that in the first year after the launch of its wealth management business in Thailand, the number of client accounts increased seven-fold and assets under management by more than 10-fold. In 2017, AuM rose by 10% year on year, and revenues by 34% year on year, reflecting the relatively untapped nature of the domestic wealth management market as well as Credit Suisse’s winning formula.
Best digital bank: Siam Commercial Bank
In Thailand’s fast-changing digital banking landscape, it is hard to stay ahead of the game. Still, under head of digital banking Tana Pothikamjorn, Siam Commercial Bank, the country’s oldest lender, has done precisely that. Building on the bank’s reputation as a disrupter, SCB was the first Thai commercial bank to scrap fees on digital transactions for money transfers and bill payments in March.
SCB sent further shock waves through the banking system when president Arthid Nanthawithaya announced plans to slash the number of branches from 1,153 to 400 over the next five years. In place of bricks and mortar, the bank would spend $1.2 billion rolling out new digital platforms as part of its strategy to create a more nimble, innovative bank better able to respond to the demands of tech-savvy consumers.
“In the past, we gained direct access to customers because they came to our branches,” says senior vice-president Dechapol Lamwilai. “Now banks have to think differently if they are to survive.”
Focusing on the bigger picture is just one part of SCB’s success. The other is providing online users with some of the best banking tools in the industry. Last year, the bank successfully launched the second-generation version of SCB Easy, its mobile banking app. This completely redesigned platform offers a series of new features, including a digital lending facility and an e-marketplace.
The bank also launched SCB Connect, a personalized service on the mobile messaging application Line that communicates account information, customized products and barcode generation for bill payment to customers.
Not surprisingly, the impact of all this has been far reaching: the number of digital users at SCB hit seven million, with more than 70% of them being active users.
Best bank for SMEs: Bank of Ayudhya
Thailand’s small and medium-sized enterprise sector was probably not the best business segment to be in over the past 12 months. Several high-profile companies struggled to service or repay their loans, leading to debt restructurings and write-offs at the banks. According to credit ratings agency Standard & Poor’s, the non-performing loan ratio for SMEs rose to 4.63% in 2017 from 4.4% in 2016, and exceeded the NPL ratio of 2.97% for total loans in the banking system.
Bank of Ayudhya, led by chief executive Noriaki Goto, ranks only fifth in the SME lending sphere, but it still packs a fair punch: its SME portfolio has expanded by an average of 12% a year since 2015.
Despite the challenging economic environment, the bank has experienced fewer problems than many of its peers. One reason it stands out from the crowd is because of its innovative range of supply chain and trade finance products. Another is its sophisticated digital platform and ability to harness parent MUFG’s strong global business network to create opportunities for Thai entrepreneurs.
“Leveraging with MUFG’s global network and capabilities, we are in unique position to support Thai corporate customers in their overseas expansion,” says Pornsanong Tuchinda, head of commercial banking at Bank of Ayudhya.
The success of the bank’s supply chain strategy meant that total funding of SME working capital reached Bt27 billion ($814 million) in 2017, up 35% from 2016. The Bangkok lender has also helped SME operators to boost profitability and improve their overall financial performance. This includes a real-time fund-transfer service based on the blockchain interledger technology to shorten the transfer period and reduce costs for customers.
Best bank for CSR: Bank of Ayudhya
Bank of Ayudhya, known locally as Krungsri, is widely viewed by analysts as the bank to watch in Thailand over the next five years. Since its acquisition by Bank of Tokyo-Mitsubishi in 2013, Bank of Ayudhya, under CEO Noriaki Goto, has built up an enviable reputation for the quality of its international management team, its expertise in consumer finance and product development and its new focus on SMEs.
But that is not all. Bank of Ayudhya is also widely seen as the bank that gives back most to society. At the heart of its corporate social responsibility activities is a focus on bringing financial literacy to the poor and supporting local communities.
In 2017, the bank established the Krungsri foundation to provide support for environmental and social causes, including natural disaster relief and education. And in January this year, it established the environmental, social and governance division to ensure that services are delivered to customers in a responsible and sustainable way.
Bank of Ayudhya has also supported micro- and nano-finance business development both in Thailand and in neighbouring countries. The Bangkok lender’s flagship financial literacy project has been running for three years, benefitting more than 14,000 students from 268 schools in Thailand and Laos. The bank contributed more than 180,000 volunteer hours to educating young people on personal finance management and basic savings skills.
Last but not least, in early 2018, Bank of Ayudhya inaugurated its new green 35-storey building, recognized as one of Thailand’s leading environmentally friendly buildings and a worthy symbol of the bank’s ambition to promote a sustainable future.