The 2022 edition of our annual report with Morgan Stanley offers insights into the next cycle for the wholesale banking industry.
The wholesale banking industry has passed through two cycles over the past decade: reform and restructuring from 2012-2019 and volatility-fueled growth from 2020-2021. The fundamental question facing the industry now is what the next cycle will hold.
Wholesale banks face great uncertainty as we head into 2022, but we see more cause for optimism than concern.
The wholesale banking industry has passed through two cycles since the global financial crisis
Industry revenues and capital, USD BN, 2012-21
- IB (Investment Banking), TBLS (Transaction Banking, Lending, Security Services). 2. Basis 100 industry equity with growth modeled on an index consisting of publicly reported figures from the following peer group: J.P. Morgan, Goldman Sachs, Bank of America, Morgan Stanley, Barclays, UBS, Societe Generale, BNP Paribas, Deutsche, CACIB, HSBC and Credit Suisse.
Source: Coalition Greenwich Competitor Analytics, Banks’ disclosures, Oliver Wyman analysis
Reform and restructuring fundamentally transformed the business model for wholesale banks, improving resilience by shifting key revenue drivers from risk warehousing to client activity. Volatility-fueled growth generated an industrywide windfall, pushing revenues to nearly $600 billion (versus $524 billion in 2019) and restoring healthy returns to 14% (versus 9.5% in 2019).
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