Emerging Asia is Leading the Global Corporate Banking Charge

CAGR from 2009 to 2016 clocked in at 12%.

Although corporate banking has been slowing down in much of the developed world, emerging Asian markets have been picking up the slack to take charge of the global growth in corporate banking as CAGR hit 12% from 2009 to 2016, according to a report from management consultancy firm McKinsey.

Emerging Asian markets include Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

Compare this with much of the developed world like in Western Europe where CAGR has fell 1% as well as North America whose CAGR inched up by a marginal 1%.

“Whilst transaction banking in Asia and Europe continues to see decreasing margins, increasing volumes particularly in Asia still fueled revenue growth,” McKinsey noted.

Growth has also been decent in EEMA and Latin America after clocking in at 9% and 10% respectively.

From an ROE perspective, developed markets also trailed their emerging market peers as they struggle with more stringent oversight and higher costs.

Western European ROEs in 2016 were 4 to 6%, whilst Latin American banks achieved ROEs of 14 to 16%. There have been recent signs of improvement in developed markets more broadly: ROE was around 8 %in 2016 which represents a four-fold increase over four years, amid a benign risk environment and progress on efficiencies.

Returns in emerging markets have tapered off slightly but potential remains vast even as rising risk cost contain growth in Chinese markets, the report added.

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