Writer: Alex
In a surprise twist, the banking industry has revealed a bold and optimistic outlook for the next two years, according to a recent survey. The 2023 Banking Sector Outlook Survey (BSOS) paints a rosy picture, with respondent banks expecting double-digit growth across various key performance indicators.
Growth Spurt Ahead
BSOS, which polled top banks across the industry, revealed that banks are expecting significant growth in assets, loans, deposits, and net income. This confidence boost is a significant departure from the global economic uncertainty and volatility that characterized the past few years.
Loan Quality on the Rise
The survey also pointed to an improvement in the quality of loan portfolios, with fewer banks anticipating a non-performing loan (NPL) ratio above 5%. Foreign banks and universal and commercial banks led the pack, with a predicted NPL ratio of less than 1% and within the range of 1-5% respectively. In contrast, smaller banking groups, including thrift, rural, cooperative, and digital banks, were more pessimistic, with most expecting an NPL ratio above 5%.
Digital Transformation Key Priority
The survey also highlighted the importance of digital transformation, with over half of respondent banks investing in new technologies to enhance their financial products and services.
Mitigating Risks
Despite the optimism, banks remain wary of credit, operational, and macroeconomic risks. Consequently, they are actively enhancing their risk governance to safeguard the interests of depositors, investors, and maintain the safety and soundness of their institutions.
Key Takeaways
- Bank assets, loans, deposits, and net income expected to grow by double digits
- Fewer banks anticipate an NPL ratio above 5%
- Foreign and universal banks most optimistic, while smaller banking groups more pessimistic
- Digital transformation a key priority
- Banks focus on corporate and retail lending, as well as sustainable and green projects
- Credit, operational, and macroeconomic risks a major concern
Call-to-action: Stay ahead of the curve and read the full report for more insights into the banking industry’s outlook and priorities for 2024-2025
