Interesting times: Out of cycle interest rate hikes have supported industry revenue growth

The Foreign Banks industry has reversed its fortunes over the past five years. Following a decline in the cash rate to historic lows in August 2016, out of cycle interest rate hikes by most banks have since supported industry growth. This has been as a result of overall higher funding costs for the banking sector. Growing investment from overseas and the rising globalisation of businesses has further contributed to industry growth over the period. Overall, industry revenue is expected to rise at an annualised 1.5% over the five years through 2018-19, to total $19.2 billion. This includes a projected rise of 4.8% over the current year, driven by rising interest rates and the increasing presence of foreign banks in the local more.

Industry Statistics & Market Size
Annual Growth 14-19
Forecast Growth 19-24

Industry Threats & Opportunities

  • Growing investment from overseas and rising globalisation of businesses has boosted the industry
  • Foreign banks are at a disadvantage compared with local banks due to lending regulations
  • Rising competition from domestic banks and neobanks has the potential to limit industry growth
  • Industry Report - Industry Products Chapter

    While the number of foreign subsidiary banks has declined over the past five years, foreign branch banks have been increasing their presence in the Australian banking sector and have grown their share of lending in the commercial market. Foreign banks have also expanded their range of retail and personal products, including housing loans, car loans and personal credit card accounts. Foreign banks with an online-only presence have grown their customer base over the past five years, as Australians have increasingly adopted online internet banking.Term loansTerm loans vary by the type of interest arrangement, maturity, securitisation and other characteristics. Larger operators in this segment tend to be foreign branch banks that draw funds from their overseas parent. For...purchase to read more.

    Additional Insights for the Foreign Banks Industry

    IBISWorld has determined the most important Key Success Factors for the Foreign Banks 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
  • 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
  • Banking sector
  • 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
  • Other
  • Term loans
  • Housing loans
  • Chart: Foreign Banks Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Corporate clients
  • Private clients
  • Other markets
  • 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
  • Industry Revenue (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Wages (2010-2024)
  • Total Assets (2010-2024)

  • 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.
  • Neobank
  • A technology-driven bank that is established and operated digitally, without a traditional branch network.
  • 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.

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    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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