zeb.market.flash (Issue 16 – January 2016)

Key Topics

1. State of the banking industry

• In Q3 2015, global banks managed to partly recover from the huge losses suffered during the decline of global stock markets in August/September—overall, 2015 was another lost year for the banking industry with a TSR of -2.3% year-over-year
• Tumultuous start to 2016, trading was repeatedly halted on China’s stock market during the first days of 2016—DAX lost over 8% in one week while global banks lost more than 6%

2. Economic environment and key banking drivers

• The economic environment in Q4 2015 was mainly influenced by contrary decisions of ECB and US Fed, leading to an upward shift of US money market rates and short term fluctuations of FX rates
• For the second time in a row, economic sentiments indicate a negative outlook for all major regions
• Profitability and CIR of global top 100 banks deteriorated slightly in Q3 2015:RoE of 11.3%
• Stable RWA density for US and BRICS institutions, Western European banks with decreasing tendency in 2015

3. Replacing the CEO – The new TSR booster?

• High number of CEO replacements—only 30% of all global top 100 banks have been managed by the same CEO during the last 5 years
• Positive impact on TSR performance in the short-term—long-term effects remain to be seen

Picture: Skyline Seattle