Key topics
1. State of the banking industry
- US and Western European banks continue their strong TSR performance in Q4 2013 with 12.0% and 6.6% respectively leaving BRICS banks with negative performance far behind
- Valuation of BRICS financial institutions further decreased and is now below valuation of US banks for the first time
2. Key banking drivers
- Economic conditions further improved in mature markets, especially in the US with a GDP growth rate of 3.6% in Q3 2013 – emerging markets still at high level with negative trend regarding GDP growth
- Long-term interest rates in the US and Germany continued to increase resulting in steeper yield curves – yield curve for BRICS remains flat
3. Special topic: Low interest rates and changing regulations –consequences of the double burden for banking stability in Europe
- Double burden of low interest rate and regulation will have massive effect on profitability and the capitalization at European banks
- Holistic actions required to overcome challenging situation
