Industry Analysis & Industry Trends
As a result of the recession, banks throughout the world suffered 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. Looking ahead, 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... read more
The collapse of the US subprime mortgage market prior to the five-year period put a sudden end to what had been a prosperous time for the Global Commercial Banks industry. In the lead up to the crisis, banks operated in an economic environment of strong growth and rising asset prices. Global stock markets continued to climb, reflecting higher corporate profit. Meanwhile, real estate values boomed, driving up household wealth. Combined with low interest rates, the result was a peak in demand for loans as businesses and households went on a debt binge.
During this period, banks relaxed their lending standards to compete more effectively with other lending institutions. In the process, they neglected their risk management practices... read more