Connect with us

Business

A new map for strategic growth in banking

Published

on

Portfolio strategists need to look beyond economic development when eyeing new investment.

When bank strategists seek new growth or reevaluate their portfolios, the odds of success often look stronger in places where banking penetration is low and opportunities relatively abundant. But not always.

To get a better understanding, we looked at the ratio of banking revenues as a share of GDP across global markets, deducting banks’ costs of risk.1 As the exhibit shows, the old pattern of banking activity that is more entrenched in developed than developing markets no longer holds: penetration in China last year reached the same levels as in the United States; Brazil’s ratio is higher than the United Kingdom; and some Eastern European nations are more “banked” than Western Europe.

Economic development should be just the starting point for a growth discussion, as multiple factors—including capital-market depth, the growth outlook, asset mixes, margin trends, regulation, and risk—should all be taken into account. Margins in some developed markets, for example, are elevated as a result of market consolidation. That may be a signal that banks in these markets are more vulnerable to margin erosion, among other challenges to the continued success of established business models. Digital attackers—fintechs and even incumbents with new, lower-cost models—will find these markets increasingly attractive. Emerging markets with high margins such as those in Latin America and China may be susceptible to abrupt turns in the credit cycle. In China, corporate lending is vulnerable to an economic slowdown.

Read the complete story Here

Continue Reading
Click to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Top Posts

Recents

China2 months ago

How will Thailand’s election affect China?

China's investment in Thailand will not be affected much by the result of the general election.

United States2 months ago

Huawei Sues the U.S. for Restricting Business With Federal Agencies

China3 months ago

Chinese investors spent $2.3 bln in Thai property in 2018

Chinese investors have continued pouring their money into Thailand’s property sector even as the kingdom barrels toward an uncertain national election. See author's...

China6 months ago

US–China trade war : will there be a winner ?

The U.S. and China are hours away from a new round of tariffs on each other’s goods, with no improvement...

Economics6 months ago

Trumping financial risks in Asia

Twenty years after the Asian financial crisis of 1997–98 and the global financial crisis of 2007–08, storm clouds are gathering...

Companies6 months ago

Thai Startup Event Banana

Event banana, a Thai start-up based on event venues and its online marketplace, has recently been able to raise about...

Business7 months ago

营商环境报告:东亚经济体继续大力推进改革议程改善营商环境

世界银行集团今天发布的《2019年营商环境报告:强化培训,促进改革》称,东亚太平洋地区各经济体继续大力推进改革议程,在过去一年里实施了43项改革以改善中小企业的营商便利度。 bsullivan See author's posts Related

News8 months ago

What are US-China Trade War Implications for Thailand ?

What are the implications of a US-China for Thailand? Will the economy be hit by global market disruption? Or could...