KUALA LUMPUR: Malayan Banking Bhd (Maybank) has become the first Malaysian bank to enter into the world’s top 20 strongest banks based on a financial evaluation undertaken by “Bloomberg Markets” magazine.
Maybank was ranked 13th in the elite global group of banks of assets of over US$100 billion based on, among other things, its capital strength, asset quality, strong reserves as well as deposit and funding strength.
Other factors where Malaysia’s largest bank scored highly in “Bloomberg Markets” third annual ranking of the world’s strongest banks included cost efficiency and risk managemnent, the magazine said in a report published on the Bloomberg website.
Maybank’s president/CEO, Abdul Wahid Omar, attributed the ranking to tough supervision by Bank Negara Malaysia and new stress testing and risk-control measures inside the bank.
Qatar National Bank came out tops in the ranking.
It was followed by Oversea-Chinese Banking Corp Ltd (Singapore), which fell from first place in 2012 and 2011, Canadian Imperial Bank of Commerce, Royal Bank of Canada, DBS Group Holdings, United Overseas Bank, Bank of Nova Scotia (Canada), Toronto-Dominion Bank, Citigroup and Hang Seng Bank (Hong Kong).
In 11th to 20th place were Svenska Handelsbanken (Sweden), China Construction Bank, Maybank, Credit Suisse Group (Switzerland), JPMorgan Chase (US), Skandinaviska Enskilda Banken (Sweden), National Bank of Canada (Canada), while Industrial & Commercial Bank of China and Turkiye Garanti Bankasi (Turkey) were tied at 18th place and Bank of Communications (China) was in 20th place.
According to the “Bloomberg Markets” report, Maybank scored highly in loan-loss reserves to non-performing assets and deposits to funding as well as efficiency which was based on costs to revenue.
To identify the world’s strongest banks, “Bloomberg Markets” evaluated 78 banks with total assets of US$100 billion or more as of mid-March including interviewing its top officials.
Maybank now has 2,200 branch offices in 20 countries and owes its size and strength to the aftermath of the 1997 to 1998 Asian financial crisis, which forced the devaluation of the region’s currencies and the near collapse of a dozen Indonesian, Malaysian, South Korean and Thai banks.
In Kuala Lumpur, Bank Negara orchestrated mergers that combined the country’s 60-plus financial institutions into 10 big commercial banking groups, now reduced to eight.
Maybank emerged from that shake-up as Malaysia’s biggest lender.
It has since expanded further to become the fourth-biggest bank by assets in Southeast Asia.
“The central bank has always adopted a very pragmatic supervision approach,” Abdul Wahid was quoted as saying in the report.
“Whenever there are signs of problems, Bank Negara has never been hesitant to intervene,” he said.
Maybank’s rapid overseas expansion began with the acquisition of a controlling stake in PT Bank Internasional Indonesia in 2008.
“The bank aims to extend its footprint to all 10 Asean countries as the region moves toward a planned economic integration by 2015,” Abdul Wahid said.
Maybank earned 30% of its pre-tax profit from overseas operations last year, the bulk of it from Indonesia and Singapore.
Alfred Chan, director of financial institutions at Fitch Ratings in Singapore, said Maybank had no choice but to look for growth outside its home territory.
“Malaysia and Singapore are highly saturated banking sectors. That means profitability tends to be on the lower end,” said Chan.
Maybank’s answer has been to expand to fast-growing nations such as Indonesia. But in Indonesia, “risk is also relatively higher compared to Malaysia,” Chan said.
As the Kuala Lumpur-based lender, which includes an Islamic-banking unit, expanded, it also strengthened its risk management team.
“We needed to make sure that we have the right people with the right skills to manage our risks,” Abdul Wahid said.
“That has been done. There’s now a risk-control team embedded in every key division of the bank,” a spokesman said.
Malaysia started putting into place the so-called Basel III rules, designed to reinforce the capital of big international banks, on Jan 1 – ahead of a majority of the 27 members of the Basel Committee on Banking Supervision.
In October, Maybank raised RM3.66 billion (US$1.18 billion) from a private placement of its shares to help bolster its capital.
And the bank said it has instituted several other Basel III reforms ahead of the international group’s timetable, which stretches the process to 2019.
“We always believe in being ahead of the curve. We are very much prepared to meet all the new requirements under Basel III,” Abdul Wahid said.