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Banking and Financial Markets

Like the regulatory framework, the structure of the international financial markets influences the development of financial service providers and economies. Scenarios for the future development of the global financial market, and the related opportunities and risks, are a major part of the work of Deutsche Bank Research.

171 (11-20)
March 18, 2020
Region:
Corona recession – depth probably close to 2009 slump. Within days lock-down measures and (temporary) factory closures have reached a level that suggests a far bigger H1 contraction than previously thought. In our new baseline scenario we expect GDP to decline between 4% and 5% in 2020, notwithstanding a recovery in H2, as – in contrast to 2009 – the service sector will be hard hit, too. (Also in this issue: the German government's support measures, labour market, industrial recession, auto industry, corporate lending, the view from Berlin) [more]
11
February 24, 2020
Region:
Analyst:
German retail clients have shown relatively little interest in passive investment alternatives, compared to traditional mutual funds. Robo-advisors, which primarily invest in ETFs, have seen the number of their clients and AuM grow. German robo-advisors could manage about EUR 25-35 bn in 2025, up from EUR 4 bn today. Their pioneer clients are largely male, middle-aged and high-income. They value full control and autonomy in their financial decisions and deal with financial matters mostly online. Still, they visit bank branches quite frequently. [more]
12
February 10, 2020
Region:
After very weak December data a small drop in Q4 GDP seems likely. Looking forward, the coronavirus provides a substantial risk for the expected global recovery, as hopes were pinned on an improvement of the Chinese economy. We assume that the corona outbreak will shave off 0.2pp of Germany's Q1 GDP, making a technical recession quite probable during the winter half. [more]
13
December 19, 2019
Region:
European banks continue to strive to not fall further behind. Revenues and costs in the first three quarters of 2019 were flat compared to their levels a year ago. Remarkably, interest income rose despite even lower interest rates. Loan loss provisions edged up from record lows. Net profits fell moderately but remained solid. Balance sheet growth was the strongest in years as banks fight to hold their ground against an array of new competitors. Along with the struggle to improve revenues, 2020 may be shaped by Basel IV implementation, continuing geopolitical risk and a fragile macroeconomy. [more]
14
December 18, 2019
Region:
ETFs have gained in popularity among private investors who have expanded their ETF investment multiple times in recent years to approximately EUR 35 bn. Nonetheless, ETFs remain a niche product for private investors considering that their total mutual fund assets amount to EUR 622 bn. ETFs have been introduced as passive investment vehicles, but active ETF management is on the rise. The sustained low-interest rate environment could allow ETFs to tap into new client segments. In Q3, loans to German households were up by a record EUR 17.9 bn qoq, driven by a record surge of EUR 16.3 bn in mortgages. Deposits grew by EUR 13.6 bn – the smallest increase in seven quarters. The fact that some banks impose negative rates on deposits seems to create negative sentiment among German savers. [more]
15
November 21, 2019
Region:
In the lending and deposit-taking business with retail customers, there are substantial differences between the federal states. 30 years after the fall of the Berlin Wall, per capita loan volumes in east Germany are significantly lower than in the west. The latter, in turn, is characterised by a certain north-south divide. Savings banks have a market share of 25-35% throughout the country, whereas cooperative banks have a much stronger presence in the south and west than in the east and north. The large banks achieve an above-average market share of 20-25% in the city states and east Germany. The spread between the federal states is smaller for deposit volumes than for credit volumes. Primarily the savings banks, cooperative banks and other commercial banks have to cope with a considerable deposit overhang and thus an "investment plight" in the negative interest rate environment. In east Germany, the deposit overhang is particularly large. Due to digitisation, changes to the established regional focuses might now be possible. [more]
16
November 20, 2019
Analyst:
Trading volumes in foreign exchange instruments have increased significantly across the board in 2019 compared to the last global FX survey three years ago. Surprisingly, the pivotal role of London as the main trading location was reconfirmed, despite fears around the impact of Brexit. Yet a general move to central clearing might challenge this after the UK leaves the EU. [more]
17
September 30, 2019
Region:
Analyst:
The future of bank branches has been under scrutiny for some time due to the increased usage of online and mobile banking. On top of the general trend, regional differences in demand for branch services may have important implications for the future of branch networks. Structurally fewer client visits in certain regions may exacerbate the pressure to close branches. Within Germany, the number of bank branches has declined sharply from around 40,000 in 2007 to some 28,000 in 2018. [more]
18
September 23, 2019
Region:
Improved performance in the second quarter has given European banks hope that 2019 may still end on a more conciliatory note and that longer-term prospects are not quite as gloomy as some fear. In H1, net interest income rose year-over-year, despite unrelenting margin pressure. Other revenue components were mixed, with fee and commission income disappointing again. Loans and total assets in general increased. Banks cut expenses further, while loan loss provisions picked up from record lows. In the end, profitability and capital levels remained largely stable. Once more, the transatlantic gulf in performance widened slightly, as US banks reported another rise in net income to a new all-time high. [more]
19
August 30, 2019
Region:
The number of bank branches in Germany has declined sharply, to 28,000 in 2018 from around 40,000 in 2007. With 33 bank branches per 100,000 inhabitants, branch density in Germany is still relatively high. Almost 70% of Germans visit a branch at least once per month. Clients who have a loan or a private pension plan or are a FinTech user are more likely to visit a bank branch, in contrast to Millennials and less wealthy Germans. In Q2, loans to German households were up by a record EUR 16.9 bn qoq and 4.4% yoy. Mortgages surged by EUR 13.2 bn and consumer loans grew dynamically by EUR 2.9 bn, too. Deposits again rose strongly by EUR 34.4 bn. [more]
20
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