Finance Industry growth/decline, challenges, cost reduction & future trends.

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What is the growth/decline in the Finance Industry?

Banks, commercial and retail

The Statistics at a Glance Historical Trends chart for all FDIC insured institutions (commercial banks and savings institutions) shows a steep and continuing decline in the number of problem institutions, from a high of 884 in 2010 to 228 year to date 2015. The number of failed institutions declined from 157 in 2010 to 5 this year to date.

More general data is available at the FDIC’s bank data and statistics site.

Commercial banks

IBISWorld cites the FDIC when it says, “Revenue for commercial banks declined every year over the past five years, largely driven by historically low interest rates over the period” adding that “inflation-adjusted interest income for commercial banks declined every year between 2010 and 2014.” (IBISWorld Commercial Banking Report, 52211, Aug. 2015)

FDIC shows that interest income declined from 481,769,538 in 2010 to 430,088,090 in 2014 and non-interest income has gone up slightly

Net income has risen.

IBISWorld finds that although revenue has declined, “profit margins have been rising.” With consolidation “many unprofitable banks exiting the market.” Added factors include “robust performance of capital markets over the past five years” and an improving economy which “has increased the credit-worthiness of an average borrower,” reducing commercial banks’ provision for loan and lease losses.”

Savings institutions/retail banks

  • FDIC shows that interest income has declined over the past five years and non-interest income has been up and down, while net income has risen slightly.

Securities industry

  • Securities Industry and Financial Markets Association publishes the SIFMA Fact Book annually. The most recent was published Sept. 30, 2015. This annual publication compiles “comprehensive data on the securities industry, capital markets, market activity, investor participation, global markets, savings and investment, and much more.”

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