“This was largely due to the cost and risk management as a result of the conservative approach of the bank,” the report said.
Further, the report also said that the Asia Pacific banking sector is expected to remain resilient as economies in the region continue to expand in 2011 albeit at a slower pace than last year.
Singapore-based financial services community strategic business intelligence provider Asian Banker said the Asia-Pacific regional banks saw a significant acceleration in asset growth in 2011 while the largest 500 banks from the US and the European Union did not grow as fast.
“If the momentum holds, Asia-Pacific regional banks are likely to overtake their Western peers by 2014.
“This is primarily due to a combination of resilient economic performance of the region’s economies, increasing private wealth and growth in the number of Asian high net- worth individuals and continual retrenchment of some Western banks from Asia and growing regional expansion by Asia-based banks,” it said in a statement.
Asian Banker said key performance indicators of the banking sector in the Asia-Pacific region such as assets, loans, deposits and net profit grew over 15% last year.
“In particular, net profit growth remains staggering at 43% to US$315.9 billion (RM958.3 billion) albeit slower than 2010’s growth rate of 53%,” it said.
Asian Banker said 2011 has been a good year for banks in Malaysia, achieving weighted average asset growth of 21.7% year-on-year (YoY) which was among the top in the Asia-Pacific region.
“The growth was mainly fostered by the strong and resilient gross domestic product growth of the Malaysian economy and Islamic banking growth of 5.1% YoY and 33% YoY in 2011 respectively as Malaysian banks embark on a regional expansion strategy in an attempt to increase their regional presence and to diversify their geographical revenue sources,” it said.
Asia-Pacific regional banks have been shoring up their capital positions as implementation of the new Basel III requirements draws near, it said. “Asset-weighted average Tier 1 and total capital adequacy ratio (CAR) grew much stronger to 14% and 16.5% in 2011 from 9.1% and 12.3% in 2010 respectively.
“For this iteration, Singapore and Philippine banks rank among the highest for Tier 1 and total CAR respectively,” it said. Asian Banker said lack of sovereign debts deter Asia-Pacific regional banks’ compliance to Basel III liquidity requirements.
“Although banks are able to withstand long-term stress to their operations as reflected in their strong capital positions, short-term risks such as liquidity continue to be one of the top issues for Asia-Pacific regional banks,” it said.
AB500 research manager Doron Foo said some regional banks in countries such as Australia, Singapore and Hong Kong are still unable to satisfy Basel III liquidity requirements due to the lack of sovereign debt in their domestic countries.