2014-04-28 12:24:05 - Global Commercial Banks - a new market research report on companiesandmarkets.com
Commercial banks perform a vital role providing businesses, consumers and governments with access to financial products and services. The collapse of the US subprime mortgage market and consequential global recession shook the world´s financial system and threatened to destroy the core foundations that the financial system relies on.
Throughout the world, banks suffered unprecedented losses as their loan loss provisions skyrocketed due to their borrowers becoming unable to repay debt obligations. In addition, during a time when the cost of funding rose sharply due to credit availability disappearing, banks wrote off billions of dollars worth of assets as values depreciated. Since the recession, the industry has limped to a slow recovery, driven primarily by economic growth in emerging markets. IBISWorld estimates
industry revenue increased at a 1.3% average annual rate to about $3.5 trillion over the five years to 2013.
At the height of the recession, many governments stepped in to bail out commercial banks on the verge of bankruptcy. In particular, the US government and leadership across Europe injected billions of dollars into their banking systems in an attempt to restore stability. However, the damage from the economic downturn was substantial and the recovery has been slow, although it has gained pace in the past two years.
Over the past two years, unemployment rates have been dropping in developed nations, which has boosted consumer spending and helped the industry´s revenue grow 4.2% in 2013. However, the sluggish recovery in housing markets has limited borrowing. Additionally, persistent uncertainty surrounding Europe´s economy and slightly slower economic growth in China are expected to dampen overall growth. As a result, the industry has been undergoing consolidation to improve economies of scale and decrease variable costs.
Looking ahead, the industry is set to fare well, albeit at a slower rate compared with prerecession levels. Banks operating in developed economies are expected to perform better as deferred business and capital expenditure moves forward. Banks in emerging markets held up well during the crisis, and opportunities exist for large global banks operating in mature markets to expand into these regions and benefit from the growth that is expected to occur in the coming five years. In the five years to 2018, industry revenue is expected to increase 3.2% annually on average to $4.1 trillion.
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