The Asian banking sector can look back at an outstanding trajectory over recent years. The sector has expanded its size, measured in total assets, by about 70 percent since the global financial crisis. After banks in North America and Europe reduced their risk-weighted assets, Asian banks today account for 40 percent of total global assets, compared to 27 percent in 2009.
Asian banks have achieved this top-line growth while maintaining an average return on equity above 10 percent, clearly higher than US or European peers. However, the road ahead looks much less predictable, and several factors make it urgent for many banks in Asia to take action:
- Macroeconomic growth is slowing down
- Past growth has pushed debt-to-GDP ratios into critical territory
- Non-performing loans (NPLs) are rising
- Global trade and capital flows are being challenged by a stronger US dollar and looming protectionism
- Digital disruption is challenging traditional business and operating models
This Oliver Wyman report looks across different markets and segments in Asian banking and attempts to distil a broad banking agenda for the region for 2017. Not every topic will be relevant to every market, segment, and institution. But these themes should be the overarching priorities in 2017 and will decide the winners and losers in the next stage of Asian banking.
