The Growth Profitability Conundrum

Time for global banks to get the balance right in Chinese wholesale banking.

China’s wholesale banking market has experienced a 15% compound growth over the last five years and is turning into one of the largest markets globally. Yet, market penetration by foreign banks remains largely flat compared to five years back and most foreign banks are suffering from sub-scale operations and low profitability, very much in contrast to other emerging markets such as Brazil.

The growth outlook for the market over the next decade remains strong, but we expect foreign banks to continue struggling as structural constraints remain and competition from local players intensifies. It is now time for foreign banks to fundamentally re-think their approach to China.

Oliver Wyman’s report, The Growth Profitability Conundrum, on China’s wholesale banking market takes a look at how foreign banks should review their business portfolio and explores alternative approaches to enhancing scale, efficiency and profitability. The report examines four ways by which foreign banks can improve their performance and discusses the respective rationale and sustainability of each approach.

The Growth Profitability Conundrum