Appointed chief executive officer of Standard Chartered Bank (SCB) of Lebanon in September 2008, Pik Yee Foong is the only female CEO in the country’s entire banking sector. She is also the first woman to hold such a senior position at SCB in the entire Middle East. Previously, Foong was chief financial officer of SCB Malaysia, with over 20 years of experience in banking, sales, finance, operations, risk management and auditing. Executive recently held a one-on-one interview with the CEO to discuss her insights on 2008 financial performance and what path she expects the global financial crisis to take in the next 12 to 18 months.
E How would you describe Standard Chartered’s 2008 financial performance?
I’m very proud of the group’s strong performance despite a deteriorating macroeconomic environment, particularly in the second half [of the year] and I would like to share with you two headline numbers. First is income growth at 26 percent to approximately $14 billion and an operating profit increase of 13 percent to $4.6 billion. This was achieved under our very strong balance sheet with a very strong capital ratio — we have a total capital ratio of 15 percent and Tier 1 capital ratio of 10 percent, which is much above the minimum requirement. We have strong liquidity with an advances-to-deposits ratio of 75 percent and [we] saw a huge increase in customer deposits, especially in the second half of the year where total increase in deposits was 31 percent. We are also a net lender to the inter-bank market. I think all these indicators and how we managed our balance sheet enabled us to achieve the kind of results that we did.
E Seeing as Standard Chartered was one of the few banks to report profits in 2008, what were your biggest challenges amidst the global financial downturn? How did you overcome them to achieve such
I have to admit that we really don’t have a crystal ball — the global uncertainty and the global crisis has hit us along with everyone else worldwide. The challenge for us at Standard Chartered was really to continue delivering to shareholders’ and customers’ expectations, whilst managing the macroeconomic uncertainties. What has supported and continues to support us during these uncertain times is our capital adequacy and the strong liquidity management discipline that we have across the bank, which is underpinned by a disciplined costs and risk management process. I believe that it’s about having a very clear and consistent strategy and most importantly sticking to it. We have and do business in the markets that we know, with products that we fully understand, with customers we know and with whom we want to mature and build relationships. We are well positioned to continue to perform despite current economic uncertainties whilst at the same time, capturing opportunities we see emerging from the turmoil.
E So do you feel more prepared now than pre- global financial crisis?
Yes. We believe that 2009 will continue to be a volatile year and that’s why in the bank we’ve themed it as ‘riding the storm,’ which will continue. However, we believe that with our strong discipline and a clear focus on our strategy we will continue to do what we do well.
E How does it feel to be the only female bank CEO in Lebanon?
I have to say I am very fortunate to be given this opportunity by the bank to come out to the Middle East and Lebanon. We have lots of very strong, capable women leaders in the bank, I’m just one of them. I think that with my experience in so many roles at Standard Chartered and given my passion for traveling and my exposure to living and working in so many countries in Asia (Hong Kong, Singapore, Malaysia) and Australia, and also working in a global role before, has helped put me in a good position to come to the Middle East. I asked for a posting to the Middle East because I see the MENA as the next growth region for the bank.
Our strategic intent is to be the best international bank in Asia, Africa and the Middle East. As the Middle East is one of the bank’s strategic markets, I feel that I’m in the best position, having benefited from the tools and products we’ve established in Asia, now to bring it with me to Lebanon. To benefit this country and this region is a great opportunity for me.
E Where do you see the most potential for growth in the Middle East? Why?
Although we say Middle East, each country operates quite differently. Potential for growth has to be with the population. First, it’s a very young population in the region, especially in Lebanon where 70 percent of the population is under the age of 40. This means it’s about demand for consumer finance. Then there are SMEs — as I’ve seen in Asia, SMEs are always a strong pivot for any government to support because that is the catalyst for growth for your future and growth of the country. Here, around 80 percent of the companies are in the SME category and I feel that has to be the area of growth where Standard Chartered is in a very strong position to partner these companies to grow, to help them take their business to the region or maybe to Asia or Africa. We have the kind of products to support these companies. As for the individuals, with the kind of liquidity and wealth in this country and the MENA region, we see a potential to work with the high-net worth individuals and to help them grow their wealth.
E How would you describe the liquidity situation in the Lebanese banking sector versus the rest of the Levant and the GCC countries?
I’m glad you separate Lebanon from the rest! Lebanon is very different, it’s an exceptional case and very different from the GCC because we’re in a very strong liquidity position here in Lebanon. [Last year was] a good year for Lebanon and for the banks, especially in the second half of the year where the GCC was suffering a liquidity crisis but Lebanon actually had an influx of deposits into the country. The AD [advances to deposits] ratio that the banking industry enjoys is about 33 percent – it’s the kind of phenomena that you would not experience in any other part of the world.
However, whilst I say that we’ve been protected from the global crisis, we are not totally immune from the effects of it going into 2009. I’d like to say that we are better prepared for what we’ve gone through last year and we are quite confident that we can ride the storm in 2009. I think Lebanon may still be affected indirectly from the effects of the recession around the world. Despite our in- house economists’ conservative view, they still project a positive GDP growth for Lebanon, which is a testimony to the strength of Lebanon.
E What is your prediction on the global financial crisis? When do you think the major markets of the global economy will start to recover?
My view, based on what I know, is that 2009 will continue to be a very volatile year. When you talk about seeing change and improvements in the global economies… I think Asia will start to recover first, as the depth of the recession there is probably shallower than in Europe and the US. We’ll probably see an improvement in the economic condition in Asia first in early 2010, then maybe spreading out to Europe and the US later on in 2010. That’s why I say 2009 will continue to be a year of economic uncertainty, so it’s very important to ride out this year. Standard Chartered has had a good momentum so far. We believe we’re in a good, strong position leveraging on our strong discipline on cost and risk management, and having strong liquidity and capital adequacy positions.
E The region will see growth of two to three percent on average, as compared to negative growth globally. Does this mean that the region will see more intense competition among banks who will try to compensate for the losses or the shrinking markets around the world?
It is undoubtedly so. When I was in Asia in December, the talk amongst bankers was already about ‘where should their next area of growth be’ and ‘where should they be investing.’ So I have no doubt that every bank will be thinking more strategically. Standard Chartered is one that welcomes competition, we have survived the competition all these years — we’ve been in Asia for 150 years and in the Middle East for 89. We believe for any bank to survive, you need to have a very core competency and very strong knowledge of the markets that you want to be in.