Iranian Bank Wins Euromoney's Best Bank Transformation Award

Euromoney's best bank transformation award for 2017 has gone to Iranian private lender Ayandeh  after successfully accomplishing a merger of troubled banks to become one of Iran’s biggest private banks.

According to its website, Ayandeh was created in 2014 through a merger of Tat Bank and two other credit institutions with an initial capital of 8 trillion rials ($212 million).  

According to Euromoney, a market research firm, another Iranian bank that did well over the year, positioning itself well for the internationalization to come, was Bank Pasargad. The bank, which was selected as Iran's best bank for the second consecutive year, grew its correspondent banking relations by an impressive 300%, from an admittedly low base.

Pasargad was founded in 2005 with the goal of becoming Iran’s first globally active private bank. Those plans were thwarted by the sanctions imposed on the country, but now it may be able to achieve that goal.

The increase in correspondent banking relations is the first step in that direction. The bank plans to open branches abroad, primarily in Europe, as well as in South Africa and South Korea.

"Over the year, Pasargad increased its paid-up capital by 20% and slightly reduced its non-performing loan ratio from 5.5% to 5.3% to bolster its balance sheet for the challenges ahead. Its revenue rose by 26% and its assets grew by 18.5%," said Euromoney.

"The bank's return on equity stood at a solid 16.7%. Time will tell if Pasargad can see off competition from such rivals as public-sector Bank of Industry and Mine, which has also achieved much since the signing of the nuclear agreement. But for now, Pasargad remains the country’s best."

Boost for Iran Banking

According to Europmoney, 2017 has been a year of tremendous change for Iran’s banking sector, as the country continued to open up to the world as a result of the effects of nuclear agreement. However, the change was not at all easy because banks struggled to modernize systems.

The level of non-performing loans remained alarmingly high and the apparent threat to the nuclear deal presented by Donald Trump’s election to the US presidency in November also caused the country’s bankers some concern.

Bankers from across the Middle East gathered to attend the Euromoney Middle East Awards for Excellence dinner at Grosvenor House in Dubai on May 17.

The awards recognized banks that stood out during a year when bank liquidity conditions began to ease, while navigating economic reform remained paramount and debut sovereign bonds brought record issuance in the debt capital markets.

Commercial International Bank won the award for the Middle East’s best bank, as it remained the Egyptian banking sector’s biggest profit-earner after Egypt staged a dramatic shift to a floating exchange rate.

"CIB recorded a return on equity of 34% in 2016, higher than any other top-tier lender in the region," says Euromoney. "It is an institution posting sky-high returns, with steadily increasing net income, at the same time as exceptional risk management and liquidity, and stellar efficiency."

International banks continue to battle the locals, with HSBC retaining the award for the region’s best investment bank. Among those competing with HSBC is First Abu Dhabi Bank, which takes the award for best bank for financing.

The result of a merger between National Bank of Abu Dhabi and First Gulf Bank, the new organization benefits from the results of NBAD’s work to build up a debt financing capacity, particularly tapping a local investor base.

"The dearth of equity financing in the Middle East plays into the hands of firms with strong debt franchises, but the local banks are not leaving the growth of the bond markets to international lenders," says Euromoney.

Volumes also boomed in the merger and acquisition markets, with JPMorgan winning the Middle East’s best bank for advisory, after taking market share and advising on the largest proportion of M&A deals during the awards period.

Other winners include Standard Chartered as the region’s best bank for markets, Credit Suisse was the region’s best bank for wealth management and Citi was best bank for corporate social responsibility.