Unsustainable profits, increasing market share from financial intermediaries and poor market valuations puts UK and European banks at risk, warns new study (FOTO)

London (ots) -

- Cross-reference: Picture is available at
http://www.presseportal.de/bilder -

A new study of the 50 largest banking groups in the UK and Europe
has revealed that although profits have increased, future
profitability is at significant risk.

The UK & European Banking Study (EBS), launched today by zeb, one
of the leading strategy and management consultancies in financial
services, shows that banks are operating in unstable market
conditions fuelled by unsustainable profit-taking, crisis level
valuations and dwindling market share.

While profitability (RoE) improved throughout 2017 (from 3.9% to
7.1%), the report states that the ability is highly unlikely for
banks to repeat these gains going forward. Profit improvements from
reduced non-litigation and extraordinary costs have allowed net
profits to surge, but it's hiding the fact that maintaining
sustainable recurring profits will be nearly impossible.

Banks are also losing market share to other financial
intermediaries including shadow banks and non-banks. These
intermediaries now hold almost half of the assets in the European
financial sector moving from 22% in 2008 to 48% in 2017. Add-in
insurers and pension funds, and this grip on what were bank assets
increases to 63%, according to the study.

Bertrand Lavayssière, Managing Director UK at zeb, says: "While
these profit results may look positive, they are, for most
institutions, superficial and hide the reality. With unsustainable
profit-taking and non-banks continuing to gain market share, banks
have built profits on a windfall situation. The time has now come to
shift towards operational improvements and to decouple those aspects
of the value chain that no longer enhance value for customers.

"A decade after the banking crisis, we have now reached a tipping
point and banks urgently need to switch from "recovery mode" to
"action mode".

The study outlines four strategic options banks can choose to
combat market conditions and produce value with true differentiation.
They include: pursuing M&A, focusing on product specialisation,
breaking up the value chain and participating in financial ecosystems
or platforms.

Mr. Lavayssière commented: "Top performing banks will be those who
are most capable of selecting a path of true differentiation while
simplifying and standardising the rest."

About the UK & European Banking Study:

The study is the industry's leading research for understanding
issues impacting the Top 50 European Banks.

EBS 18 profiles and ranks every top 50 European bank, based on
analysis of capitalisation, total assets and return on equity. The
study will show why recent profitability improvements may only be a
short-term gain and how market shares are under attack.

Industry executives will also gain insights to address
consolidation, regain market share and improve profits by focusing on
areas like customer relationships, product specialisation,
disintermediation and ways to simplify and standardise for greater
operational profit improvements.

To learn more and obtain a copy of the new report, please visit
https://zeb.eu/ebs18 or email publications@zeb.eu .

About zeb

zeb is a strategy and management consulting firm specializing in
the banking and financial services sector with 18 offices across
Germany, Austria, Denmark, Italy, Luxembourg, the Netherlands,
Norway, Poland, Russia, Sweden, Switzerland, the United Kingdom and
the United States of America. With more than 1,000 employees, zeb is
one of the leading consulting firms for banks, savings banks,
insurance companies and other financial institutions in Europe.
www.zeb.co.uk

Please contact:
Jonathan Lenz at CubanEight
Tel: 01869 715090
Email: zeb@cubaneight.com

Original-Content von: zeb, übermittelt durch news aktuell