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Key topics
1. State of the banking industry
- Despite good P/L results in the last quarters, global banks’ market capitalization dropped sharply by -16.8% in Q3 2015 due to market turmoil in China
- Only six of global top 100 banks with positive total shareholder return
- Debt markets with significantly increased CDS spreads
2. Key banking drivers
- Economic condition in Western Europe remained stable-US growth declined again
- After a sharp increase in Q2 2015, long-term interest rates in Germany and the US dropped again, leading to flatter yield curves
- NPL ratios in BRICS and especially in China continued to rise effects on European and American banks are expected
3. Special topic: Is China causing the next financial crisis?
- Liberalization of the exchange rate regime in China led to a strong depreciation of the CNY and together with weakened economic growth rates to a crash of stock markets
- Direct consequences for banks include depreciations on Chinese investments whereas indirect effects may lead to higher non-performing loans and losses for industry companies invested in China affecting banks’ P&Ls in the upcoming quarters
Picture: Skyline Miami
