Global banking has achieved success in 2023 despite the drama of bank failures.
The banking industry emerged victorious in 2023, a year that threatened to be catastrophic. Quick industry intervention averted the nightmare scenario of a financial crisis caused by contagion caused by the failure of numerous banks in the US and Europe.
Last year’s mini-crisis of bank failures can best be seen as the result of a kind of management apathy at the banks that were eventually bailed out. However, the identified risks inherent in app-based banking and the potential collapse of banks due to rapid run-offs have become a wake-up call for the industry, especially among fast-growing neobank challengers.
As a result, raising current account ratios for savings accounts and improving deposit stickiness have become a central focus for bank executives in the past year.
As in 2022, net interest margins (NIM) were healthy due to the central bank’s tight monetary policy. Last year, a long-missing dynamic entered the fray: positive return on equity, which reappeared after being negative or flat for 15 years following the 2007-2009 global financial crisis and averaging 9% last year.
Bank profits in Asia-Pacific have soared, with many lenders enjoying record-high net income – even in sclerotic Japan, where the banking sector’s 12-year battle against negative interest rates appears to be coming to an end as easy money approaches by the end. to completion. China was noticeably absent from the party, with the troubled real estate sector dampening sentiment.
Last year, the global banking industry demonstrated greater economic efficiency and improved asset quality. However, the direction of movement will be determined by economic growth; changes in the central bank’s base rate, particularly by the U.S. Federal Reserve; demand for credit; and loan delinquency rates.
As the cost of capital came into focus and banks sought to reduce cost-to-income (CTI) ratios, the industry lost 60,000 jobs globally last year, the highest since the crisis. Investment banking commission wallets have collapsed as the number of deals and listings has fallen.
At the same time, traditional bank lending was challenged by the thriving private credit market created by the non-bank financial sector. Leveraged buyout funds were more often provided by a large hedge fund than by a large bank, and at more competitive rates.
Environmental, social and governance (ESG) issues remained a dominant theme: in Europe as an overall operating contribution thanks to a tightening regulatory straitjacket, and in Asia as companies and banks caught up on sustainability. play during the onset of ESG-focused regulatory convergence emerging across the region.
Sustainable finance dominates the entire spectrum of finance around the world, whether in the transitional format that dominates in Japan, or in the full-blown green issuance typical of Europe and the US and growing in the Asia-Pacific region, with the exception of Japan.
In Europe, banks enjoyed their most profitable year ever thanks to the NIM effect, solid asset quality and low CTI ratios. The Bank for International Settlements’ capital needs record has been poor, with more capital returned to the bank’s shareholders last year than at any other time since the crisis.
Methodology
With input from industry analysts, corporate executives and technology experts, Global finance The editors select the Best Bank Award winners using information provided in entries and independent research based on objective and subjective factors. You are not required to participate to win, but materials included in your entry may increase your chances of success. Participants may provide information that is not publicly available.
Judgments are based on results from January 1 to December 31, 2023. We then apply an algorithm to narrow down the list of applicants and arrive at a numerical score, with 100 representing perfection. The algorithm includes criteria weighted by relative importance, including local and customer knowledge, financial strength and security, strategic relationships, capital investment, and product and service innovation.
Once we’ve narrowed the field, our final criteria include scale of global reach, size of staff, customer service, risk management, product and service offerings, execution skills and smart use of technology. In the event of a tie, our bias leans towards the local service provider rather than the global organization. We also tend to favor private banks over government institutions. The winners are those banks that best serve the specialized needs of corporations engaged in global business. It’s not always the biggest that wins, but the best: companies with qualities to look out for when choosing a supplier.