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Foreign banks to double growth
By Jiang Nan (China Daily)
Updated: 2005-11-02 06:17
Fuelled by the market potential and the opportunity to expand their customer
and product base, foreign banks are poised to double or even triple their growth
targets in China over the next three years, according to a survey from
PricewaterhouseCoopers.
The survey, based on personal interviews with 35 banks conducted in Beijing,
Shanghai, Shenzhen, Tianjin and Hong Kong, focuses on the strategic and emerging
issues surrounding the expansion of foreign banks in China.
Over seventy per cent of banks surveyed predict an annual revenue growth rate
of at least 30 per cent for 2005 that will continue over the next three years.
Four banks expect to continue to grow by at least 100 per cent annually
through to 2008 due to increased market access.
"The ever-growing presence of foreign banks in the Chinese market has
contributed to the strong and active support from their head offices," said
Mervyn Jacob, partner of PricewaterhouseCoopers.
Thirty percent of the participants attributed a maxiumun score of 10 for the
level of commitment from their head office.
In terms of profits, the banks have had mixed success to date. Trade finance,
money markets and foreign exchange are the most lucrative segments, while
retailing and corporate banking are seeing a comparatively flat performance.
Foreign banks believe that credit cards, mortgages and investment products
will become increasingly important in the Chinese retail-banking sector in the
next three years. For the wholesale banking segment, the top three concerns
would be debt capital markets, credit derivatives and risk management products.
Moreover, the overall market is becoming more client-driven and foreign
lenders are going to introduce new products, notably in the treasury
market.However, the pace of future market expansion is still uncertain and as
one banker observed, even after 2006, there still remains "a bumpy road ahead".
To further increase their market presence, most of the respondent banks will
choose organic growth, followed by partnering with a joint stock commercial bank
and then with one of the "Big Four" commercial banks.
"This is because foreign banks regard their ability to exercise management
control as the most critical issue when choosing a joint venture for expansion,"
explained Mervyn Jacob.
(China Daily 11/02/2005 page9)
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