Global uncertainty limits banks’ financial performance

Dunya Executive - - OVERVIEW -

Profitability in the banking sector in 2016 was weak due to a slowdown in the world economy and uncertainty about policy may continue to restrict income in 2017, according to EY’s Global Banking Outlook 2017 Report.

The report from the professional services firm said banks’ financial performance has been declining even in developing countries, where growth opportunities are higher than developed countries.

The effects of Brexit and new banking regulations in the United States are still uncertain, the report said. Only 11 percent of banking executives expect financial performance to see a significant improvement over the next year.

Despite the weak global backdrop, Turkey’s banking sector has potential to grow faster than the global average, said Selim Elhadef, head of EY’s consulting services department and the financial services sector in Turkey. “When we look at the Turkish banking system, we see that the effect of regulation is remarking for a long time, similar to previous years,” Elhadef said. “Global banking seems to be more open to the effects the new term FinTech will create, for the time being. When we observe the development of the trend, we may think that Turkey will arrive with a little delay. “While global banks generally feel more pressure on capital and asset quality, Turkish banks are relatively more comfortable with these benefits,” he added

Elhadef said that new technology could boost areas, like retail banking, for Turkish banks. Investment banking and lending to small and medium-sized business could also help Turkey outpace global banking growth.

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