Market Commentary
APAC Banks to Face Existential Choice
InvestorDaily
A new report has found that banks in the APAC region are set to face an existential choice in order to stay competitive. The latest Asia-Pacific Banking Review from McKinsey & Company has warned that banks will have to choose between unlocking the potential of scale to boost productivity and capital or prepare to be acquired. McKinsey has been running the report for the last few years and this latest report reaffirms what the report found in 2016: that a storm was brewing due to macroeconomic growth and weakening balance sheets.
In the region, the industry is growing with profits before tax topping $700 billion, representing 37 per cent of global banking profit pools. But a closer look found that the banks are facing growing pains as they mature, including slowing growth, thinning margins and higher capital requirements. The growth has slowed too, with annual revenue growth between 2014 and 2018 down from double digits to just 5 per cent and profit pools slowing to just 3 per cent.
The rest of this article can be found at investordaily.com.au.