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Transaction banking feels the strain, revenues fall by 6%

Research by analytics company Coalition has recorded a drop in transaction banking revenues for the first time since 2010. Revenues in the sector fell by six per cent in 2015 compared to the previous 12 months.

The research is based on figures reported by 12 banks: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Société Générale and UBS.

The 12 banks collectively brought in $36.8bn from their transaction banking businesses in 2015, compared to $39.1bn in 2014.

Revenues from cash managed fell by five per cent, from $30.3bn to $28.7bn, while earnings from trade finance dropped by nine per cent, from $8.8bn to $8bn.

The report found that earnings from transaction banking have continued to grow since 2010, albeit at an increasingly slow pace, and 2015 was the first year to see an actual decrease in revenue. In 2010 revenues were $35bn.

Analysts point to the slowdown in emerging markets and pressure in commodities as being factors for a decrease in trade finance earnings. However, supply chain finance has seen increased client demand.

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