State of the banking industry
- In Q1 2013, the upward trend of recent quarters continued as market capitalization reached highest value since 2010
- Investors continue to favor commercial banks; gap between mature and growth markets narrows
- CDS spreads of Western European banks again increased significantly in March 2013 due to the recent market turmoil in Cyprus
Key banking drivers
- Interest rates remain at historic lows, but are not yet fully reflected in business margins
- Banks’ RoE forecasts predict increasing RoEs despite weak economic fundamentals
Special topic: Succeeding in a low interest rate environment
- A detailed analysis shows that the current low interest rate level may reduce net interest income of banks by up to 14%, thus threatening banks’ profitability
- Only a differentiated and effective set of strategic initiatives will help banks to limit the losses occurring from low interest rates
