KEY TOPICS
1. State of the banking industry
- Banks showed best TSR performance of all industry sectors both, in Q2 2015 and year-over-year, but Western European banks lost value as Greek crisis heated up again
- Market capitalization of global Top 100 banks remained constant q-o-q
- Several Western European banks were downgraded significantly in Q2 2015 as rating agencies started to include the lower possibility of government support of banks due to regulatory changes
2. Key banking drivers
- Global economic environment improved in the last quarter—reflected with significant increase in inflation rates reducing the fear of deflation
- Long-term interest rates jumped up significantly in Western Europe and the US, leading to steeper yield curves
- Equity offerings and M&A business achieved very good results
3. Special topic: The Greek crisis and a turning European credit cycle
- The situation in Greece shows that the European debt crisis is far from over
- ECB is single guarantor for economic stability, but policy of ultra low yields increases possibility of credit bubbles
- Turning credit cycle creates massive new risks but also opportunities for banks
Picture: Skyline Seoul
