In May, FinanceAsia named the winners of its annual Country Awards for Achievement. In June, we presented the overall Best Bank in Asia award to Indonesia's BCA
Today, we continue presenting our rationale for the awards with the winners from Malaysia.
BEST BANK, BEST INVESTMENT BANK, BEST ECM HOUSE: CIMB
CIMB, the second-largest lender in Malaysia by assets, has an unrivalled local franchise on the domestic banking industry and over the past year it has proved to be as solid as ever. Our judges were particularly impressed by the bank’s ability to expand into other Southeast Asian nations.
Its 2017 profit before tax from outside of Malaysia rose by 31% year on year, compared with 22% the prior year. Profit from Indonesia rose fastest, rising 48.5% to RM1.37 billion. As a result its operating income rose by 9.7% year on year to a record RM17.63 billion in 2017, while its return on equity, a metric of profitability, rose to 9.6%, a tad higher than its guidance of 9.5%.
It has struck a partnership with Alibaba’s Ant Financial to improve efficiency and eke out even better returns by providing mobile e-wallet services in Malaysia, setting a ROE target for 2018 of 10.5%.
CIMB also formed a joint venture with China Galaxy Securities in January to facilitate greater investment and capital flows between Southeast Asia and China. It sold a 50% stake in subsidiary CIMB Securities International for RM500 million to the Chinese firm, strengthening the Malaysian lender’s balance sheet. With the stake sale, the group’s cost-to-income ratio will increase by 100 basis points while its core equity tier-1 ratio will rise around 10bp. The joint venture represents the first foray by a Chinese securities firm into Southeast Asia and aims to offer investors a means for riding the wave of cross-border investment under China's Belt and Road Initiative.
CIMB retained its crown in equity capital markets during our review period, maintaining its dominant market share and providing value-added services to major clients. The Kuala Lumpur-based lender was involved in the $877 billion float of Lotte Chemical and the $387 million share placement by Maxis, respectively the largest initial public offering and follow-on transaction conducted in Malaysia during our review period.
Dealogic allocated $1.34 billion of league table credits to CIMB, more than the next two best-placed bookrunners combined. CIMB had a market share of 30.56%, compared with Credit Suisse’s 15% stake in second spot.
CIMB believes its strong momentum will likely continue over the next couple of years after historic elections in May put in power a new government and removed much of the political uncertainty that had been hanging over Malaysia.
BEST DCM, BEST BROKER: MAYBANK
Maybank, the largest lender in Malaysia by assets, walked away with both trophies in the face of stiff competition thanks to its solid position in the domestic debt market.
According to Dealogic, Maybank underwrote more than $2.4 billion of bonds for Malaysian issuers during our review period, with a market share of 27.48%. The bank advised state-owned Danajamin Nasional Berhad on its RM500 million subordinated sukuk murabahah in October, the first financial issuer to issue tier-1 subordinated sukuk. It was also a bookrunner on Quantum Solar Park’s RM1 billion green sukuk, the first rated green sukuk primarily investing in sustainable and socially responsible projects.
In addition to green bonds the bank worked on a number of debut transactions, including PR1MA Corporation of Malaysia’s dual-tranche bond sale, raising almost $600 million for the government housing authority to develop affordable housing for middle-income households.
Maybank’s comprehensive banking services from origination to execution are also impressive. The bank’s all-round support ensures liquidity in the secondary market and promotes price discovery for future issuances, while its fund administration facilitates one-day execution for investors on the issuance day, removing any settlement risk.
BEST FOREIGN BANK: CITI
Citi continues to be the dominant foreign bank across retail and consumer banking in Malaysia.
The US bank views Malaysia as one of Asia’s most promising markets thanks to strong foreign direct investment inflows, low labour costs and young educated population.
Its commitment to the country’s rising middle class has proved to be a profitable bet. Its return on equity rose to 21.3% in 2017, up from 17.4% the prior year. Its profit before tax surged 29% year-on-year to RM1.04 billion in 2017, thanks to more stringent credit controls. The allowance for loans and advances dropped by 73% as it reversed the previous year’s write-down.
In the retail market, Citi was the first bank in Malaysia to launch voice authentication over the phone, allowing its clients to bypass the PIN or answer any verification questions. Since the phone banking service was launched in 2016, more than 383,000 clients have enrolled.
From April 2017 to March 2018, Citi added over 6,200 new customers across its retail segments, while its investment assets under management grew by 15%.
Where credit cards are concerned, the bank remains one of the three largest issuers in the country.
BEST FOREIGN INVESTMENT BANK: CREDIT SUISSE
Credit Suisse’s strong equity platform and its mergers and acquisitions work made it a clear winner in this category. Its nearest overall rival in Malaysia this year was JP Morgan – the only other foreign broker in Dealogic’s top-5 rankings for domestic equity transactions.
Dealogic apportions Credit Suisse $656 million of league table credit for five deals over our review period, compared with JP Morgan’s $204 million in two transactions. To be sure, the two banks were both bookrunners on the $877 million listing of Lotte Chemical in July last year, the country’s biggest initial public offering since Astro Malaysia’s $1.5bn listing in October 2012. But Credit Suisse was the only bank working the three largest equity capital market transactions in Malaysia during our review period. The Swiss bank was a bookrunner in CIMB’s $611 million share placement in September and telecom operator Maxis Berhad’s $387 million share placement in June.
In M&A, Credit Suisse was an advisor to BBAM, one of the world’s largest aircraft portfolio managers, on its $2.85 billion acquisition of AirAsia’s aircraft leasing business, which has up to 182 Airbus jets. As part of the agreement AirAsia will lease back the planes from BBAM, thus saving on fixed costs.
