Who sets the bar in North Asia transaction banking?
In 2016, you can say that the renminbi cross-borde...
What makes The Asset Triple A Best Bank in Asia? A number of factors define this winning bank: a growing and healthy overall business; a one-stop-shop able to serve clients across capital-raising, advisory, working capital and personal finance; a geographic footprint with presence in the most important markets; a trendsetter capturing especially advances in technology that simplifies and facilitates; and a bank that undertakes the ordinary business of banking extraordinarily well. In 2016, Citi, DBS and HSBC have stood ahead and apart from the competition.
Citi reported positive revenue growth last year with global consumer banking in Asia notching US$5.1 billion revenues, while the institutional clients group in Asia posting another US$5.4 billion in revenues. For the first nine months of 2016, seven markets generated over US$500 million in revenues for Citi.
The US bank continued to grow in Asia with assets in the region rising 6% year-on-year to US$325 billion. It opened a new office in Hong Kong One Bay East, launched voice biometrics across Asia, Prestige credit card in China and Simplicity+ in Indonesia.
Citi is turning to digital to enhance its franchise in Asia, forging digital partnerships with the likes of Grab, Line, Alipay, Lazada, and WeChat. Close to 50% of Citi credit cards in China are now settled via Alipay, and one-in-four cards are acquired online for a 64% growth year-on-year. Digital is driving consumer deposit growth as it rose 7% year-on-year to over US$93 billion in Asia, despite a 12% reduction in its physical network.
In terms of corporate and institutional banking, Citi is consistent in arranging marquee transactions across equity/equity-linked, debt capital markets, and M&A. It was the sole international global coordinator for Samsung BioLogics Company’s US$2 billion IPO, which was voted as Triple A Best IPO. It was also a joint global coordinator and bookrunner in another award winning deal - the US$540 million IPO for Cemex Philippines, voted as the Triple A Best Mid-Cap Equity Deal.
Citi helped arranged several bond deals that defined the G3 bond market, including the CNH tranche in Bank of China’s green bond amounting to 1.5 billion yuan; the Republic of the Philippines’ US$2 billion accelerated one-day switch tender offer and new bond; the US$2.5 billion bond offering for the Export-Import Bank of Korea; and the DBS Group’s US$750 million Basel III-compliant additional tier 1 capital.
Citi was also a trusted financial adviser and represented clients in deals such as China outbound acquisitions and divestments from multinationals. It also advised on the largest ever transport transaction in Southeast Asia involving CMA CGM/Neptune Orient Lines; the largest Taiwan domestic transaction since 2013 with the Advanced Semiconductor Engineering/Siliconware; and in the largest ever insurance deal in India involving HDFC/Max Life Insurance.
DBS achieved a net profit of S$3.33 billion in the first nine months of 2016 and excluding one-time items, it was little change from a year ago due to a doubling of total allowances. The results, though, underscored the earnings resilience of the franchise as it continued to capture opportunities across multiple business lines, while recognizing loan impairment promptly and maintaining a healthy balance sheet.
Consumer banking/wealth management posted a 21% increase in income to S$3.2 billion, led by income from bancassurance, loans, and deposits. Income from institutional banking was little changed at S$3.96 billion as the increments in cash management, capital markets, and loan activities were offset by the declines in trade and treasury customer sales, due to uncertainty related to China and the renminbi.
DBS is also making a big push on digitalization and has been deeply immersed in furthering its digital transformation agenda during the past three years. It capped that commitment to shape the future of banking with the launch in November of new innovation facility called DBS Asia X (DAX).
DBS is likewise active in terms of raising funds for its clients across equity and debt. It remains a leader in Asian Reits, acting as a global coordinator in the US$664.9 million IPO for Frasers Logistics and Industrial Trust, and in the US$255.1 million IPO for EC World Reit.
With a strong debt franchise, it helped arrange deals for several corporates across the region, such as the US$2 billion bonds for Huawei Investment and Holding Co, and the US$500 million subordinated perpetual securities for Olam International. It also brought a Chinese local government financing vehicle into the US dollar bond market with a US$500 million offering for Xi’an Municipal Infrastructure Construction Investment Group Corporation.
HSBC had a challenging year in 2016, posting a profit before tax in Asia of US$10.815 billion in the first nine months of the year, compared with US$12.948 billion in the same period a year ago. On a quarter-on-quarter basis, the profit before tax rose marginally to US$3.66 billion at the end of September from US$3.625 billion at the end of June 2016.
Yields on customer lending were unchanged in Asia. The bank enjoyed lower cost of funds, notably from a reduction in the cost of customer accounts in Asia, reflecting a shift in its portfolio in Hong Kong to lower-cost current accounts and the effects of lower central bank rates in China, Australia, and India.
Trade revenue remained under pressure, but it continued to make market share gains in some of the world’s largest trade centres, including Hong Kong and Singapore.
Like its competitors, HSBC is investing in digital innovation and is working with the Hong Kong government to develop the next generation of banking technology at a new innovation lab. The bank and the government-funded Hong Kong Applied Science and Technology Research Institute have joined hands to focus on areas including online banking, cyber security, biometric authentication, big data analytics, artificial intelligence, and blockchain technology.
In terms of deals, HSBC is active in arranging IPO deals in 2016 such as the US$7.4 billion share sale for Postal Savings Bank of China and US$810 million for CDB Financial Leasing Company. It also arranged a US$600 million zero coupon H-share convertible bond for CRRC Corporation.
HSBC is a debt market powerhouse with a strong franchise in G3 and local currency bonds, as well as in syndicated loans. It topped the league table again for arranging G3 bonds in the region, with deals across a wide spectrum of credits from sovereign to corporates and financial institutions. It brought Asian insurance companies to the offshore bond markets for the first time, such as Union Life Insurance and Ping An Life Insurance. It was a structuring adviser in a number of green bond deals, and it is a pioneering house in G3 liability management in Asia.
In loan syndication, it was a mandated lead arranger and underwriter in the US$3.5 billion acquisition financing for the purchase of Supercell by Tencent-led consortium, and a mandated lead arranger and bookrunner in the US$32.7 billion acquisition financing for Syngenta by ChemChina.
In terms of M&A, HSBC was adviser in the ChemChina/Syngenta deal, and in the disposal of Casino’s majority stake in Big C Supercenter. It also engineered the China Overseas Land and Investment’s strategic acquisition of CITIC Group’s property portfolio.
The winner of the Triple A Best Bank will be revealed on February 28, 2017 during The Asset’s Regional House & Deal Awards Dinner. For more information about the awards ceremony please click here
10 Jan 2017