Asian banks first to return to normal growth rates among global banks: IDC Financial Insights
Singapore and Hong Kong – 28 February, 2013 – Asian IT leaders can now think about "new" things in banking as regional banks become the first to go back to normal growth rates among global financial institutions.
“Asia/Pacific banks are returning to normal rates of growth in terms of revenues and profits,” says Michael Araneta, director for IDC Financial Insights Asia/Pacific.
Araneta expects that the industry in the region will see rare occasions of extraordinary gains and declines in revenues in 2013. Profit growth for the region's largest banks converged to 20% in 2012 over 2011, and will converge to approximately 15% in 2013 -- similar to rates of growth in pre-crisis years. Meanwhile, revenue and profit growth in the world’s leading banks has not normalized, and the swings in profitability continue to be wild among the largest non-Asian banks in the world.
"While the previous years saw banks report super-growth especially in terms of profits, we will see less of that trend in 2012. However, going back to normal is not a bad thing, especially if you are moving on from a crisis."
He notes that the region's banks are also going back to pre-crisis growth levels for IT spending.
Araneta expects IT spending in Asian banks to grow 8.8% in 2013 over 2012. This figure is an improvement from the approximately 7% growth the industry saw in the previous year, and the 6.5% the year before that.
“I believe that this speaks of banks’ improving confidence in the financial conditions in the region and in the rest of the world. This also points to the theme of ‘going back to normal’ because this 8.8% brings us back to pre-crisis rates of growth.”
A major area of spending will be on core banking modernizations. Araneta explains that as a group, Asia/Pacific banks are assumed to compare favorably versus their peers in the United States and Europe with respect to the age of core banking systems currently in use.
In the "old world," truly modern core systems are rare. In Asia/Pacific, meanwhile, there have been many references of banks leapfrogging technologies and investing in new generation core systems, not to mention how several newly emerged institutions have built up altogether sophisticated core banking platforms.
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