Cashing in: Commercial loans demand growth and rising interest rates to boost industry revenue

Low interest rates have been the main factor behind the decline in the Foreign Banks industry over the past five years. Intense competition from domestic banks has further added to the industry's poor performance, holding back growth in the industry's loan books, particularly in the residential mortgage lending of foreign subsidiaries, over the past five years. Industry revenue is projected to remain largely unchanged over the current year, rising by less than 0.1%. Overall, industry revenue is forecast to decline at an annualised 3.7% over the five years through 2017-18, to total $18.4 billion. Despite falling revenue, profitability has improved over the period due to lower funding costs for banks...read more.

Industry Statistics & Market Size
Revenue
$18bn
Annual Growth 13-18
-3.7%
Forecast Growth 18-23
Profit
Employment
13,709
Businesses
52

Industry Threats & Opportunities

  • Foreign bank subsidiaries have struggled to compete with the scale of local banks
  • Foreign banks are at a disadvantage compared with local banks due to lending regulations
  • Rising competition from domestic banks for retail clients is likely to limit industry growth
  • Industry Report - Industry Key Buyers Chapter

    The Foreign Banks industry is characterised by low market share concentration. The four largest players are estimated to account for less than 40% of industry revenue. Unlike the local big four banks, which have a significant share of the consumer retail market, only seven foreign banks have substantial retail operations in Australia. Furthermore, the regulation governing the entry of foreign banks into Australia is not as onerous if operators only establish a foreign branch as opposed to a foreign subsidiary. Foreign branches are limited in their lending capacity and can only provide business lending. While the number of foreign bank subsidiaries has declined slightly over the past five years, the number of foreign bank branches has increased. Ove...purchase to read more.

    Additional Insights for the Foreign Banks Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Foreign Banks Industry are

  • Superior financial management and debt management
  • Ability to raise revenue from additional sources
  • Membership of joint marketing/distribution operations
  • IBISWorld analysts also discuss how external factors such as Cash rate and Business confidence index in the Foreign Banks industry impact industry performance..

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    What's in this report

    What is the Foreign Banks Industry?

    The industry comprises the banking activities of foreign bank subsidiaries, branches and representative offices in Australia. Foreign banks generate revenue through interest income on loans and advances, and fee and commission income.

    Industry Products
  • Housing loans
  • Term loans
  • Other lending activities
  • Other financial products
  • Industry Activities
  • Development bank operation
  • Savings bank operation
  • Trading bank operation
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Cash rate
  • Business confidence index
  • Household consumption expenditure
  • Total capital expenditure
  • Residential property yields

  • Current Performance
  • Revenue and assets
  • Profitability improves
  • Foreign bank restrictions
  • Emerging Asian operators
  • Chart: Revenue Growth

  • Industry Outlook
  • Economic conditions
  • Increasing competition
  • Operational changes
  • Table: Foreign Banks Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Foreign Banks Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Construction
  • Consumers

  • Key Selling Industries
  • Accounting Services
  • Finance
  • Legal Services

  • Products & Services
  • Term loans
  • Other financial products
  • Other lending activities
  • Housing loans
  • Chart: Foreign Banks Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Financial intermediaries
  • Private clients
  • Corporate clients
  • Chart: Major Market Segmentation for the Foreign Banks Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Profit
  • Interest expenses
  • Wages
  • Other
  • Chart: Cost Structure Benchmarking – Sector vs Foreign Banks

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Foreign Banks Industry

  • Industry Globalization
    ING Bank (Australia) Limited, Citigroup Pty Limited, HSBC Australia Holdings Pty Limited,
  • Table: ING Bank (Australia) Limited - financial performance
  • Table: Citigroup Pty Limited - financial performance
  • Table: HSBC Australia Holdings Pty Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Foreign Banks Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Foreign Banks Industry
    Includes:
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Foreign Bank Branches
  • Banks that are licensed to conduct banking business in Australia through branches, but with a restriction on accepting retail deposits.
  • Foreign Bank Subsidiaries
  • Locally incorporated companies that have a licence to collect retail deposits of less than $250,000.
  • Securitisation
  • The act of producing investment securities from cashflows from specific assets.
  • What Our Customers Say

    Why buy this report?

    The Foreign Banks market research report provides key industry analysis and industry statistics, measures market size, analyzes current and future industry trends and shows market share for the industry’s largest companies. IBISWorld publishes the largest collection of industry reports so you can see an industry’s supply chain, economic drivers and key buyers and markets.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Foreign Banks:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Foreign Banks market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Foreign Banks, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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