Global

Details

  • Industry: Financial Services, Capital Markets, Banking
  • Type: Benchmarking study, Survey report, White paper
  • Date: 7/16/2012

Performance highlights 

The fragile economic recovery in 2010 stalled in 2011 with events in Europe being a major factor. 2011 performance has been dominated by notable items with sovereign debt impairment, PPI redress costs and goodwill write-offs topping the list. Even those banks not directly affected by these issues have suffered from the fall-out in terms of the general market and economic conditions. Below are a few highlights from the report.

Performance Highlights Figure1

Profitability

With the backdrop of the global economic position and, in particular, the situation in the Eurozone, only five of the banks recorded an increase in profits in 2011. A clear trend in the most successful banks this year was diversified portfolios, with banks operating in emerging markets and Asia faring well.

Costs

Cost reduction is one of the key objectives quoted by many of the banks. However, 10 of the banks saw an increase in their cost:income ratio in 2011. Total operating expenses increased for 10 of the banks

Return on equity

Return on equity (RoE) remains a key performance indicator for banks and an important measure for shareholders. Since the financial crisis, RoE ratios1 have reduced significantly for all the banks.

Derivative assets

Across the banks, derivative assets grew by 31%, partially due to increased trading volumes, but mainly because of increases in mark to market values. As expected, the biggest derivative portfolios continue to be held by the large investment banks.


1Comparison of published RoE ratios is difficult because of the different calculation bases used by the banks. Therefore, a common calculation (profit after tax divided by average accounting equity) has been used in our analysis.

 

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