Best Commercial Bank: Public Bank
FinanceAsia received over 90 submissions for this year's country awards, and of all the domestic institutions that submitted none was more thorough or professional than Public Bank. Its submission was proof positive of its desire to retain the coveted country award that it won last year. It responded with a 20-page document answering every question in the submission letter. If this wasn't impressive enough, it also included four research reports written about itself in the last year - each of which explained why Public Bank was the topic pick among Malaysian banks.
The bank posted a 50% increase in profits in 1999 and a return on equity of 14.2%. This was the highest among Malaysia's leading banks. What FinanceAsia likes about Public Bank is that it is perfectly positioned to grow in a sensible way. It is one of the country's best run and most conservative banks - with a loan to deposit ratio of 55% - and its franchise came through the crisis stronger rather than weaker.
It has been growing its loans to small and medium sized enterprises from the Malaysian Chinese business community and has also set about increasing its mortgage business (it grew its market share from 5.2% of mortgages in 1999 to 6.1% in the first quarter of 2000). Its gross NPLs are only 5% versus the whole industry's 12.1%.
Public Bank's core capital was almost double that of the rest of the industry at 19.7%. And with 345 branches and 261 ATMs, it is second only to Maybank in terms of universal reach, and with the Hock Hua merger, is able to target Sarawak for the first time. No surprise then that it is a 'buy' with 19 different brokers.
Best Foreign Commercial Bank: Citibank
One of the few great blessings of Malaysia's regulatory minefield is that it means foreign banks have to break out their results in full - because they are separately registered Malaysian companies. They can't hide behind regional figures. We are therefore able to make some concrete comparisons between the big boys where Malaysia is concerned.
Citibank comes out as the most profitable of the big banks in 1999, with $91 million of profit being derived from a mere three branches. Its return on equity is also the highest at 27.9%, pipping Standard Chartered's 27.4%. Indeed, Citibank is a class act in Malaysia and of all the submissions we received from Citibank this year (10 in total), the Malaysian entry was probably of the highest clarity.
Citibank has a very aggressive strategy in Malaysia. It has constructed a regional trade operations centre in Penang as a mark of its commitment to the country and has expanded the number of its active corporate clients to 750, and expanded its loans by 24%, increasing total assets to nearly $4 billion. The idea behind this is to reinforce Citibank's new image that it is there for its clients in good times and bad - and these have been bad times in Malaysia.
And, as if to reinforce Citigroup's overall approach, it has arranged loans for the government, plus bond issues and has helped in the development of the local ringgit bond market via bonds for YTL Corp, Hewlett-Packard, Nestle, and Rothmans of Pall Mall.
Best Domestic Securities House: CIMB
Run by the astute and well-connected Nazir Razak, (his father was Mahathir's most distinguished predecessor as Malaysian prime minister, and there's a major road in Kuala Lumpur named after the family), CIMB is a great all-rounder.
It excels in corporate advisory - no doubt thanks to the Cambridge-educated Razak and his 72 corporate finance staff - and is the most dynamic local house in the local debt markets. Its turnover on the Kuala Lumpur Stock Exchange is 5.6%, while it led seven IPOs in 1999 and two in 2000 (for Apex Healthcare and Unimech Group), giving it an 18.47% market share for 1999.
CIMB made profits after tax of M$189 million, far exceeding any other local houses and garnered a return on equity in 1999 of 22.9%, which has to be a record for the Malaysian industry as a whole in such dire conditions. Its advisory activity ranges from the JT International RJ Reynolds Berhad acquisition in August 1999 to disposals by Worldwide Holdings. Its advisory income at M$26 million was around half that earned by the entire domestic M&A sector.
It has also been active on the part of Renong, which is hardly surprising given Renong is a shareholder in Commerce Asset, which spawned CIMB. Indeed it launched Malaysia's biggest ever corporate bond on behalf of Renong, as well as advising Khazanah and Danaharta on debt sales. According to Rating Agency Malaysia, CIMB launched 30.26% of all private debt securities (for which, read corporate bonds) between 1991 and December 1999.
Among the many advantages CIMB has is that no one in the government seems to be intent on trying to destroy it - a useful advantage to have in Malaysia (although who knows what may happen tomorrow).
Best Foreign Securities House: CLSA
There are few places on the planet where local knowledge is more important than Malaysia. Knowing who is 'in' and who is 'out' is vital for any institutional investor. That is why Amar Gill's team at CLSA in Kuala Lumpur is such a revelation. Amar, who has been covering his native Malaysia for 10 years, has been at CLSA for an unthinkably long time thanks to the firm's share-ownership scheme, and that continuity has produced marvelous results.
The firm's market timing has been good. In the first quarter Malaysia was up 24% in the first two months and Gill put out a 280-page report in the first week of January arguing for a reappraisal of the country.
CLSA also organizes Kuala Lumpur's largest and most successful conference, which attracted 110 top-quality clients this year. It was opened by UMNO Youth Chief Hishammudin Hussein, who surprised everyone when he said the country's leaders must listen more closely to the people if they expect to stay in power.