Banking on stability: Operators are restructuring to comply with new regulation
London, United Kingdom (PRWEB) June 17, 2013
The past five years have been some of the most volatile in the history of the banking industry. After a period of surging revenue and profit driven by a credit boom, a strong economy and an unprecedented expansion in banking operations and products, the industry was brought to its knees by the financial crisis in late 2008. As global capital markets plunged and banks stopped lending to each other, massive asset write-downs wiped out bank equity, resulting in the collapse of Northern Rock and forcing the partial nationalisation of those left standing.
The industry endured a torrid time, with revenue declining in 2008-09 before increasing strongly in 2009-10, thanks to government bailouts and assistance. Bank revenue declined again in 2010-11 as economic conditions weakened further, and remained flat in the following two years. The industry is expected to grow by 1.7% to £135.8 billion in 2013-14, as retail and commercial lending is expected to increase marginally during the year. According to IBISWorld industry analyst Iyman Uvais, “growth will be supported by government initiatives introduced to boost the housing sector and improve lending to small and medium-size enterprises”. However, a sluggish economic recovery and a tightening regulatory environment will constrain industry growth during the year. Despite, these volatile conditions, IBISWorld expects industry revenue to increase at a compound annual rate of 6.3% over the five years through 2013-14, but this figure is skewed by the 44.6% surge in 2009-10.
Uvais adds, “the outlook for the industry over the next five years through 2018-19 is more stable, although challenging conditions are expected to persist as the slow-moving economic environment and rising regulation weigh on revenue and squeeze margins”. The industry is anticipated to grow moderately in the medium term but its performance will remain far below that in the halcyon days of the mid-2000s.
IBISWorld estimates that the four largest UK banks hold a combined market share of 47.4%, which indicates a medium level of industry concentration. Concentration increased significantly with Lloyds' January 2009 acquisition of HBOS, which had been hit hard by the financial crisis. Major companies include Barclays, Lloyds, RBS and HSBC.
For more information on the Banks industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
This industry covers the retail and commercial banking activities of deposit-taking institutions. Retail and commercial banks accept deposits from and make loans to individuals and businesses.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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