Commercial Banking in the US Industry Market Research Report Now Available from IBISWorld

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After the industry experienced severe ups and downs during the past five years, commercial banks are set to recover over the next five years to 2017. Banks endured massive loan losses as a result of the credit crisis, causing revenue to contract significantly. Though banks are starting to return to pre-recession profit levels, loan and lease losses have not recovered at the same rate and have increased. The credit crisis caused large-scale M&A activity in the industry, with four out of the top five commercial banks having either merged or acquired larger struggling banks. However, as consumer confidence slowly increases and the credit markets gradually thaw, revenue will experience growth in the next five-year period. For these reasons, industry research firm IBISWorld has added a report on the Commercial Banking industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Flat commercial and retail loan demand are expected to weigh on revenue growth

The Commercial Banking industry is comprised of banks regulated by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC). Banks generate the majority of their revenue by accepting customer deposits and then lending these deposits out to individuals and businesses at a higher interest rate. In the five years to 2012, industry revenue is expected to grow 2.0% annually on average. According to the FDIC, commercial banks are starting to return to pre-recession profit levels with industry net income increasing at an annualized rate of 2.3% in the four years to 2011 with much of that growth taking place over 2011 (latest available data). However, this growth rate hides huge losses experienced on home-loan defaults that cut industry net income by $12.3 billion at the height of the crisis in 2008. On the other hand, loan and lease losses have not recovered at the same rate as industry net income and have actually increased at an annualized rate of 42.7% over the same four-year period to $216.6 billion. “This trend is expected to stay consistent with a continued poor housing market,” according to IBISWorld industry analyst Eben Jose. “Despite deposit growth and high corporate profit, flat-lined commercial and retail loan demand, coupled with rising loan write-offs, are expected to hinder 2012 industry revenue.” Revenue is only expected to increase 0.5% to $613.5 billion by year-end.

The Commercial Banking industry landscape changed greatly during the five years to 2012 and will likely continue changing through 2017. Because of the subprime mortgage crisis and the recession, industry contraction accelerated, and the four largest commercial banks, including JPMorgan Chase and Wells Fargo, increased their market share. The subprime mortgage crisis has caused large-scale M&A activity in the banking sector; four out of the top five commercial banks have either merged or acquired larger banks struggling due to losses associated with the crisis, resulting in a leap of concentration within the industry. Although the top four banks’ market share has risen, large losses by major player Citigroup have weakened its individual market share. “Market concentration is expected to increase over the five years to 2012, as smaller commercial banks are unable to compete against larger commercial banks' diverse products and services,” adds Jose. From 2007 to 2012, the number of commercial banks is expected to decline at an annualized rate of 2.8% to total 6,320. In the next five years, government regulation and technology-driven competition are forecast to dramatically change the business model of banks.

During the five years to 2017, industry revenue will be less volatile than in the previous five years. Commercial banks will continue to benefit from the government's Troubled Asset Relief Program. These "too big to fail" banks will grow deposits at a faster rate than smaller savings institutions, whose reputations were badly damaged by the significant number of bank failures that occurred between 2007 and early 2012. For more information, visit IBISWorld’s Commercial Banking in the US industry report page.

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IBISWorld industry Report Key Topics

The industry comprises banks that provide financial services to retail and business clients in the form of commercial, industrial and consumer loans. Banks also accept deposits from customers, which are then used as a source of funding for the loans. Banks in this industry include banks that are regulated by the Office of the Comptroller of the Currency. Banks that are regulated by the Office of Thrift Supervision are included in the Savings Banks and Thrifts industry.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call 1-800-330-3772.

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Gavin Smith
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