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 Global Commercial Banks industry operates with a medium level of capital intensity. IBISWorld estimates that for every $1.00 spent on wages, the industry will allocate $0.22 to capital investment. The industry's level of capital intensity has increased slightly over the five-year period, as the industry allocated $0.21 in capital expenditure per dollar in wages in 2011. However, the industry's moderate level of capital intensity largely reflects massive other costs, including interest expenses and loan loss provisions, rather than an extensive reliance on equipment or other forms of capital.
Many commercial banks provide financial services internationally and need a physical presence in the form of branches and ATMs to compete effectively... read more