5 Macro Trends Bankers Should Watch
With “disrupt,” “adapt” or “agility” appearing almost 400 times in the latest annual reports of the 20 largest global banks, it’s clear that bankers face an identity crisis. They can be forgiven a degree of paranoia: Of the 20 largest global commercial banks as of year-end 2016, seven are new to the list since year-end 2006.
Paranoia leads many bank management teams and boards to focus overwhelmingly on the short game, especially next quarter’s stock performance. Yet in many ways the underlying business remains a long game. Consumers change their primary bank very rarely. Tier 1 capital — the long-term capital that serves as a last defense against failure — has reached a record high. Bank equity investors currently pay for 13 years of annual earnings in the US and other Western markets. And the loan portfolio for the top 20 banks has one-third of loans maturing in more than five years.