GENEVA, Switzerland 9 November 2009 – Temenos (SIX: TEMN), the market-leading provider of integrated core banking systems, today reveals analysis showing that banks running its core banking software are significantly more profitable than their peers. Using data from The Banker Top 1000 banks 2009 report*, Temenos is able to demonstrate that banks running its software have on average: a 62% higher return on assets (at 15.3%), a 54% higher return on capital (at 1.3%) and a cost/income ratio (at 56.9) that is 7.2 points lower than non-Temenos customers.
Bank of Shanghai, a Temenos customer since 2005 and the first major bank in China to implement a core banking system from a foreign vendor, runs over 13 million accounts using a single instance of T24. This centralised infrastructure will enable Bank of Shanghai to extract significant IT economies of scale in the future and, over the last three years Bank of Shanghai has already enjoyed strong operating leverage. Between 2005 and 2008, the bank achieved over 900 basis points of margin expansion, growing operating profit at a compound annual rate of 35% over the period. Compared to similar-sized City Commercial and Joint Stock Banks, Bank of Shanghai’s cost to income ratio (at 35.3) is about 15% lower (and 56% lower than the average of the top 1000 banks), while its return on capital is around 40% higher. In this year’s Banker Top 1000 banks report, the bank climbed from 288th to 256th.
Jiang Hong, Vice President, Bank of Shanghai comments: “With T24, Bank of Shanghai has effectively futureproofed its IT infrastructure. We have a platform that is robust and scalable enough to support our ambitious growth plans. We also have a platform that allows us to standardise our processes and extract the scale benefits of growth. Lastly, we have a system that allows us to have one complete view of the customer across all of our operations and gives us the flexibility to take advantage of this, by tailoring products and services to individual customer needs.”
Schroders, which was ranked 261 in The Banker Top 1000 report 2009, is an example of a bank that has benefited from taking Temenos’ core banking software. Since centralising its IT and support infrastructure with T24 in 2007, Schroders Private Banking, the private banking arm of the Schroders group, has been able to cut operating costs by one third.
“Our view is that IT and support costs, as a percentage of total costs, should decrease over time. Our competitive advantage comes from excellent customer service and innovative products. We aim to direct as many resources as possible to the customer-facing parts of the business”, commented Pierre-Louis Favre, CFO, Schroder & Co Bank AG.
First Gulf Bank (FGB), the most profitable bank in UAE as measured by return on assets, has been using T24 since 2003. During this time, it has grown its net profit at a compound annual rate of 90% and, for two consecutive years, was the fastest growing bank in the world. In addition to return on assets, FGB also ranks first in UAE for cost/income (at 24.2, this is more than 60% lower than the average of top 1000 banks) and non-performing loans (more than 80% lower than the average for the top 1000 banks). Since its entry into the Banker’s top 1000 banks in 2004, FGB has risen 797 places and now ranks 160th.
Andreas Andreades, CEO, Temenos said, ‘The last 18 months have presented real challenges for banks across the globe. The era of easy leverage, low risk capital, readily available wholesale funding and cross-subsidisation from booming capital market divisions is over. Our view is that banks will have to go back to basics: improve efficiency, enhance the customer experience and upgrade risk management systems. For a long time, we have been making the case that our software helps banks to achieve these goals, but now we are able to provide quantitative evidence to prove this is true. We work with the most successful banks in the world and our software helps them to stay on top.”
* For details of the calculation methodology, please visit our website www.temenos.com/profit
About Temenos
Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 51 offices worldwide, Temenos serves over 700 customers in more than 120 countries. Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe. Temenos’ advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos is top of the IBS Sales League Table 2008, winner every year since its launch of the Best Core Banking Product in Banking Technology magazine’s Readers’ Choice Awards and ranks 26th in the American Banker top 100 FinTech companies. Temenos customers are proven to be more profitable than their peers: data from The Banker – top 1000 banks shows that Temenos’ customers enjoy a 62% higher return on assets, a 54% higher return on capital and a cost/income ratio that is 7.2 points lower than non-Temenos customers.
Jiang Hong, Vice President, Bank of Shanghai comments: “With T24, Bank of Shanghai has effectively futureproofed its IT infrastructure. We have a platform that is robust and scalable enough to support our ambitious growth plans. We also have a platform that allows us to standardise our processes and extract the scale benefits of growth. Lastly, we have a system that allows us to have one complete view of the customer across all of our operations and gives us the flexibility to take advantage of this, by tailoring products and services to individual customer needs.”
Schroders, which was ranked 261 in The Banker Top 1000 report 2009, is an example of a bank that has benefited from taking Temenos’ core banking software. Since centralising its IT and support infrastructure with T24 in 2007, Schroders Private Banking, the private banking arm of the Schroders group, has been able to cut operating costs by one third.
“Our view is that IT and support costs, as a percentage of total costs, should decrease over time. Our competitive advantage comes from excellent customer service and innovative products. We aim to direct as many resources as possible to the customer-facing parts of the business”, commented Pierre-Louis Favre, CFO, Schroder & Co Bank AG.
First Gulf Bank (FGB), the most profitable bank in UAE as measured by return on assets, has been using T24 since 2003. During this time, it has grown its net profit at a compound annual rate of 90% and, for two consecutive years, was the fastest growing bank in the world. In addition to return on assets, FGB also ranks first in UAE for cost/income (at 24.2, this is more than 60% lower than the average of top 1000 banks) and non-performing loans (more than 80% lower than the average for the top 1000 banks). Since its entry into the Banker’s top 1000 banks in 2004, FGB has risen 797 places and now ranks 160th.
Andreas Andreades, CEO, Temenos said, ‘The last 18 months have presented real challenges for banks across the globe. The era of easy leverage, low risk capital, readily available wholesale funding and cross-subsidisation from booming capital market divisions is over. Our view is that banks will have to go back to basics: improve efficiency, enhance the customer experience and upgrade risk management systems. For a long time, we have been making the case that our software helps banks to achieve these goals, but now we are able to provide quantitative evidence to prove this is true. We work with the most successful banks in the world and our software helps them to stay on top.”
* For details of the calculation methodology, please visit our website www.temenos.com/profit
About Temenos
Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 51 offices worldwide, Temenos serves over 700 customers in more than 120 countries. Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe. Temenos’ advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos is top of the IBS Sales League Table 2008, winner every year since its launch of the Best Core Banking Product in Banking Technology magazine’s Readers’ Choice Awards and ranks 26th in the American Banker top 100 FinTech companies. Temenos customers are proven to be more profitable than their peers: data from The Banker – top 1000 banks shows that Temenos’ customers enjoy a 62% higher return on assets, a 54% higher return on capital and a cost/income ratio that is 7.2 points lower than non-Temenos customers.