The Taiwanese exception

Macau is a highly profitable market for the banking sector. The exception comes from Taiwan’s Hua Nan bank 

Out of the 29 banks operating in Macau that have public accounts, three had negative results in 2019 but, of those three, two (Macao Development Bank and Ant Bank/XInghui) had, on 31 December, less than a year of activity. 

Of those established before 2019, the exception is the local branch of Taiwanese bank Hua Nan Commercial bank (HNCB), which ended its activity last year with a MOP45 million loss. 

Hua Nan received authorization to work in Macau in August 2011 and has since been one of the smallest banks operating in the local market. 

Only in 2014 did it achieve positive results (MOP9 million) and its best year was experienced in 2018, when it closed accounts with MOP21.4 million. 

“In 2019, due to the growing uncertainty of the external environment, although the activity of this branch has registered a steady development, it was not possible to achieve the expected result,” is the only explanation that the bank transmits in the report made public in an official bulletin. 

In a context, in which nearly all banks in operation achieved positive results, Macau Business tried to find out more.  “The negative result was basically caused by bad-debt provision under volatile external environment with growing uncertainty, even though the branch had registered a steady development last year,” the bank explained to us from Taipei. “HNCB has made efforts on business operation for profitability continuously this year, and hope it will come out with a good result,” they also stated. 

As for the other two banks with results in the red, this is a normal situation for those who, at 31 December, had not yet completed a year of activity. 

Macao Development Bank and Ant Bank have more in common than it seems, apart from being new to the local financial market. 

They are two banks which are betting on the new trend of FinTech banking. 

Ant Bank even assumes as “the first bank in Macau to position itself in financial services on the Internet, being actively exploring the use of financial technology services resources”, while Development Bank clearly states that the “main objective of the Bank for the year 2020 is to maintain dominance in the field of financial technology (‘FinTech’), developing the Bank as an electronic financial platform for customers.” 

If both follow the trend of the Agricultural Bank of China, which received authorization to work in Macau in late 2017 and, after two years of activity, closed its accounts with MOP25 million, both will achieve positive results in late 2020. 

What has changed in five years 

The banking market in Macau is known for its stability, so it is not surprising that, considering the figures for 2014, there are few changes: the top five positioned five years ago remain in those positions. 

We have already mentioned the three new banks, which are ‘replacing’ two others, both of Portuguese origin, which left: BPI and Caixa Geral de Depósitos. 

If the fact that China Construction Bank in 2014 was the 15th most profitable and has now climbed seven positions is not exactly new, more relevant is the fact that Bank of East Asia was the 13th with the best results in 2014 and five years later is in the last position. 

In contrast, the Macau Chinese Bank was the least profitable in 2014, being in 2019 a mid-ranking player. 

 (There are 30 banks operating in Macau and not 29, as mentioned here, but Banco Delta Asia still does not publicly disclose its accounts) 

Net income  (in MOP millions) 

1  Bank of China  5,478 
2  Industrial and Commercial Bank of China  3,008 
3  Tai Fung  2.176 
4  Luso International Banking  1,727 
5  Banco Nacional Ultramarino  634,4 
6  Bank of Communications  560,9 
7  OCBC Weng Hang  348,2 
8  China Construction Bank   337,9 
9  The Hongkong and Shanghai Banking Corporation   287,7 
10  China Guanfa Bank  196,8 
11  Banco Comercial de Macau   172,0 
12  Hang Seng Bank  147,2 
13  Banco Comercial Português  96,2 
14  Bank Sinopac Company  82,6 
15  CMB Wing Lung  58,8 
16  Banco Well Link  56,7 
17  Standard Chartered Bank  53,1 
18  Macau Chinese Bank  49,9 
19  Chong Hing Bank  49,0 
20  CITIC  36,3 
21  Caixa Económica Postal  29,7 
22  DBS Bank  27,0 
23  Agricultural Bank of China  25,8 
24  Citibank  25,7 
25  First Commercial Bank  20,8 
26  The Bank of East Asia  14,B 
27  Hua Nan Bank  -45,7 
28  Ant Bank  -53,4 
29  Macao Development Bank   -98,8 

Mainland affairs 

Of the 29 banks, 13 are controlled by Mainland Chinese capital. 

In other words, Mainland Chinese capital does not need to own half of the banks in town to take the lion’s share of Macau’s banking sector. 

The four most profitable ones, alone, add up to MOP12.3 billion and these four are the only ones to climb to the billions’ league. 

The remaining nine Mainland Chinese banks add up to MOP 1.2 billion, which total MOP 13.6 billion. 

In contrast, the 16 non-mainland Chinese banks, where five are located in Hong Kong, add up to MOP2 billion, being led by the Portuguese Banco Nacional Ultramarino. 

  Total (in MOP million) 
Mainland Chinese capital banks  13,651 
Non-Mainland Chinese capital banks  2,021