Foreign Banks in Australia Industry Market Research Report Now Updated by IBISWorld
Melbourne, Australia (PRWEB) November 09, 2014 -- Low interest rates and weak demand for commercial lending has restrained revenue growth for the Foreign Banks industry over the past five years. Industry revenue is forecast to decline by an annualised 4.4% over the five years through 2014-15, to reach $18.8 billion. This decline can be largely attributed to the low interest rate environment and intense competition from national and regional commercial banks. This competition has pushed lending portfolios lower over the past five years. Industry revenue is expected to increase slightly in 2014-15, rising by 2.2% as positive business confidence drives demand for commercial loans. According to IBISWorld industry analyst Stephen Gargano, “despite the industry's poor performance, industry profitability is expected to improve over the period due to lower interest expense.”
Foreign banks are less exposed to the residential lending market than domestic banks, and depend more on commercial lending. Commercial lending has been significantly restrained over the past five years, with low business confidence hindering growth. Nevertheless, foreign bank subsidiaries, such as HSBC and ING Direct, are in for the long haul. Over the past five years, these retail banks have targeted the home loan market and offered attractive interest rates to spur deposits. Growth from these banks is being aided by reforms in banking regulation that have sought to increase competition in the retail banking segment. Competition within the industry is high, making revenue growth all the more difficult. Over the five years through 2014-15, the number of foreign banks is expected to increase. “Although Asian banks are increasingly establishing a presence in Australia, European banks are scaling back,” says Gargano. The outlook is brighter for the next five years. The industry's success will depend on the recovery in commercial lending and its ability to penetrate the residential mortgage market. While interest rates are currently at historic lows, these rates are expected to rise strongly over the next five years, significantly boosting revenue from loan portfolios.
The Foreign Banks industry is characterised by a low level of market share concentration. There are a large number of participants in the industry, substantially more than the number of national and regional commercial banks. This fragmentation occurs as the target markets for each bank vary more than national and regional commercial banks. Unlike the big four banks, which all serve the consumer retail market, only eight foreign banks are allowed to conduct retail operations in Australia.
For more information, visit IBISWorld’s Foreign Banks industry in Australia report page.
The Foreign Banks industry comprises the banking activities of foreign bank subsidiaries, branches and representative offices in Australia. Foreign banks generate revenue through interest income on loans and advances, and fee and commission income.
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IBISWorld industry Report Key Topics
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognised 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 Australian 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 Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.
Gavin Smith, IBISWorld, http://www.ibisworld.com, +61 396553838, [email protected]
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