Piqued: Rising interest rates and economies of scale will boost revenue

Revenue for the Commercial Banking industry in California finally returned to growth over the five years to 2017 as the industry continued to rebound from the subprime mortgage crisis and corresponding economic downturn. During the period, both revenue and profit margins have risen. Significant consolidation in the industry over the past five years has resulted in many unprofitable banks exiting the market. Additionally, robust performance of capital markets over the past five years has boosted profit margins. Over the five years to 2022, government regulation and technology-driven competition are forecast to dramatically change the business model that commercial banks use...read more.

Industry Statistics & Market Size
Revenue
$28bn
Annual Growth 12-17
4.1%
Forecast Growth 17-22
Profit
Employment
70,228
Businesses
7,316
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Industry Threats & Opportunities

  • The volume of loans and leases in the state has risen, which has allowed operators to amass more interest income
  • Operators opened more establishments to grow their customer bases during the period
  • Interest rates will remain low compared to historical standards
  • Industry Report - Industry Products Chapter

    Commercial banks earn interest revenue from loan products and noninterest revenue from fees and other services. In 2017, 78.4% of industry revenue in California derives from interest income from loans, while earnings from depository service fees and other noninterest sources such as gains on securities account for roughly 21.6% of industry revenue.Real estate loansReal estate loans include all mortgage products for retail consumers, including loans secured by refinancing activity and lease financing and receivables. In 2017, these loans account for an estimated 51.6% of commercial banking revenue in California, with roughly 55.2% of this segment's revenue stemming from commercial real estate loans. Overall, revenue from real estate loans has fallen since 2012...purchase to read more.

    Additional Insights for the Commercial Banking in California Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Commercial Banking in California Industry are

  • Having a good reputation
  • Membership of joint marketing/distribution operations
  • Superior financial management and debt management
  • IBISWorld analysts also discuss how external factors such as Access to Credit in California and Corporate Profit in California in the Commercial Banking in California industry impact industry performance..

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    What is the Commercial Banking in California Industry?

    This industry comprises commercial banks in California that provide financial services to retail and business clients in the form of commercial, industrial and consumer loans. Banks accept deposits from customers, which are used as sources of funding for loans. Operators receive charters from either the Office of the Comptroller of the Currency or the California Department of Business Oversight. Banks are also insured by the Federal Deposit Insurance Corporation (FDIC).

    Industry Products
  • Real estate loans
  • Depository services and other noninterest-income generating products
  • Commercial and industrial loans
  • Loans to individuals
  • Industry Activities
  • Receiving deposits from customers
  • Issuing consumer, commercial and industrial loans
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Access to Credit in California
  • Corporate Profit in California
  • Per Capita Disposable Income in California
  • Regulation for the Banking sector
  • External competition for the Commercial Banking industry

  • Current Performance
  • Interest rates
  • Noninterest Income
  • Provisions for loan and lease losses
  • Chart: Revenue Growth

  • Industry Outlook
  • Interest rates
  • Barriers to entry and regulation
  • Competition
  • Table: Commercial Banking in California Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Commercial Banking in California Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Agriculture, Forestry, Fishing and Hunting
  • Mining
  • Construction
  • Information
  • Consumers

  • Key Selling Industries
  • Central Banking
  • Commercial Leasing

  • Products & Services
  • Real estate loans
  • Depository services and other noninterest-income generating products
  • Commercial and industrial loans
  • Other
  • Loans to individuals
  • Chart: Commercial Banking in California Industry Products and Services Segmentation

  • Major Markets
  • Corporate clients
  • Retail customers
  • Other clients
  • Chart: Major Market Segmentation for the Commercial Banking in California Industry

  • Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitWagesRent and utilitiesOther expenses
  • Chart: Cost Structure Benchmarking – Sector vs Commercial Banking in California

  • Basis of Competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Commercial Banking in California Industry

  • Bank of America Corporation JPMorgan Chase & Co.Wells Fargo & CompanyMitsubishi UFJ Financial Group Inc.
  • Table: Bank of America Corporation - financial performance
  • Table: JPMorgan Chase & Co. - financial performance
  • Table: Wells Fargo & Company - financial performance
  • Table: Mitsubishi UFJ Financial Group Inc. - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Commercial Banking in California Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Commercial Banking in California Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • Prime Rate (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Basis Point
  • One hundredth of one percent (i.e. 25 basis points is 0.25%).
  • Generation Y
  • The demographic of Americans generally aged 10 to 30.
  • Loan And Lease Loss Provision
  • An amount set aside as an allowance for bad debts (i.e. debts where the customer defaults or where the terms of the loan need to be renegotiated).
  • Loan Default
  • When a customer fails to pay back money received through a loan to the bank.
  • Subprime Mortgage
  • A type of mortgage made out to borrowers with lower credit ratings. Lending institutions often charge higher interest on subprime mortgages to compensate themselves for carrying more risk.
  • Warrant
  • A type of security that entitles the holder to purchase stock in the issuing company at a specified price.
  • Write-Down
  • A deliberate reduction in the value of an asset to reflect its current market value.
  • Why buy this report?

    IBISWorld’s Commercial Banking in California Industry Research Report offers insight into the market at the national level. Our analysis highlights macro trends in the overall sector and the micro trends faced by companies that do business in the Commercial Banking in California industry. Our five-year outlook forecasts explain how the market is set to change and the product segments that will drive growth.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Commercial Banking in California:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Commercial Banking in California market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Commercial Banking in California, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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