Asia would become a major hub for corporate and investment banking in five years, according to a report released by McKinsey.
The corporate and investment banking (CIB) revenues, which stood at $442 billion in 2010, would rise to $790 billion in 2015, the report said.
“Asia could account for a startling 45 per cent of the global CIB market’s growth over the coming years,” the report said, adding the focus of the banks would shift fast from developed Asian nations such as Japan to the two Asian giants, India and China.
India’s CIB revenues are expected grow between 15 and 17 per cent in five years. However, despite fast growth, revenues from China would provide the major thrust to overall growth in Asia.
“Should China’s real GDP (gross domestic product) keep rising by an average annual rate of nine per cent, as several economists still predict, the resulting increase in loan volumes would account for 55 per cent of Asia’s revenue growth,” McKinsey said.
Despite the uncertain economic conditions, the interviewees remained extremely positive on outlook of the Asian region. “Asia will become the largest- and fastest-growing region in the wholesale banking universe by 2015, and the dynamics of the game would change — more players would enter, customers would become more knowledgeable and demanding, and cross-regional business would become more important,” said Akash Lal, partner and leader, Asia corporate banking practice, McKinsey.
The study involved a survey of 100 large and 200 mid-sized wholesale banking clients in Asia, along with 45 senior banking executives. “Three large opportunities come to the fore: The rapidly growing mid-corporate segment, a potential inflection point in the growth of Asia’s capital markets, and continued expansion of regional transaction banking,” the report said on the basis of responses received.
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McKinsey said revenues for banks from mid-corporates would double to almost $308 billion by 2015, primarily driven by expansion in India and China. Capital markets and investment banking opportunities would double to $158 billion by 2015, owing to growth in these countries.
The two giants would likely become major revenue pools, together contributing 40 per cent to Asia’s total by 2015. By the end of the period, China would generate about $53 billion in revenues and India about a quarter of that amount, despite quicker growth,” McKinsey said.