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Global investment banking market: $321.2 billion industry forecast by 2018

London 9/29/2014 01:17 AM GMT (TransWorldNews)

The past five years have challenged the Global Investment Banking and Brokerage industry. When the subprime crisis hit investment banking in late 2007, it caused billion-dollar losses for many major US and European banks. It also marked the beginning of a period of change for the industry in terms of regulation, consolidation and activities.

Financial markets in the United States and Europe struggled to recover from the financial crisis, while a slowdown in worldwide business and trading activity tempered the pace of growth in Asia, Africa and Asia. Over the five years to 2013, IBISWorld estimates that revenue for the Global Investment Banking and Brokerage industry grew at a 5.0% average annual rate, from a recessionary low of $233.1 billion in 2008 to about $297.0 billion in 2013; however, revenue still remains well below its prerecessionary high of $364.6 billion in 2007.

Entering 2013, the industry is still finding its footing and is expected to decline 1.1% as regulations in the United States and Europe take effect. Additionally, slow worldwide economic growth, fears over high sovereign debt levels and weak consumer confidence have kept business and trading activity below prerecessionary levels. As a result, worldwide demand for industry investment banking and broker-dealer services remains suppressed. The industry is still seeing layoffs and declines in revenue in the United States and Europe that is slightly being offset by growth, albeit at a slowing pace, in the Asia-Pacific and Africa regions. Correspondingly, the average industry profit margin is expected to average about 17.0% of industry revenue in 2013, up from a low of 12.5% in 2008 but still well below the 20.0% achieved before the recession.

Over the next five years, new regulations in the United States and parts of Europe will shape and constrain the industry. The implementation of Basel III, the Volcker Rule and possible recommendations from the Vickers Report will further scatter the operations of investment banks. Investment banks will shift resources away from risky activities into more stable, fee-based activities and regions with faster economic growth.

The Asia-Pacific, Africa and Eastern European regions will be key drivers of global industry growth and increase as a share of industry revenue. Over the five years to 2018, industry revenue is forecast to grow at a 1.6% average annual rate to about $321.2 billion.



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