Asian banks' wholesale revenues soar 21% in 2017

They lead the rest of the world when shares of global banks plunged 17%.

Asian banks are steadily picking up pace in their bid for larger market share and zooming past their foreign counterparts as the region’s wholesale revenues surged 21% from 2010 to 2017, according to a report from Morgan Stanley.

The region’s largest economy China continues to lead the pack as CAGR grew 6% in 2017 as it sets its sights for global markets. Southeast Asia as a whole also posted a slight expansion with CAGR hitting 0.1%.

“Local banks are investing heavily and could gain advantages through the better use of data, the emergence of innovative open API platforms, and participation in trade and supply chain ecosystems,” the report added.

Liberalisation of local markets and a commitment to the disruption of payment systems ought to keep the steady growth trajectory of Asian banks, according to Morgan Stanley. 

Also read: What are the big shifts that have deep implications on Asian banks?

On the other hand, foreign players have been unable to keep up pace with the changing dynamics of the international arena as wholesale revenues plunged 17% over the same period with CAGR of investment banks falling 4% and offshore universals dipping 7%. Only onshore universals rose by a marginal 2% in 2017.

The slump comes as global banks grapple with lower returns on equity due to increased competition, FD loss and lower NII which are hampering the expansion efforts of global firms into Asia, Morgan Stanley pointed out.

To stay relevant, larger global banks must continue to invest heavily on global platforms to keep up pace with their Asian counterparts who have already captured the regional market.