Deloitte’s 2013 Banking Industry Ou

Deloitte’s 2013 Banking Industry Outlook suggested that
“making hard decisions about where to compete” would
be one of the key issues facing banks. Over the last year,
we have seen many banks make these strategic choices
– deciding which businesses are “core” and simplifying
operational infrastructure. The good news is that the path
of strategic reconfiguration has become clearer, making
2014 the year that banks might see the dividends from
their strategic choices.
2013 has given some good reasons for this optimism. The
S&P 500 index reached new highs. The steady recovery
in home prices continues in the housing market, reaching
their five-year high in July.1
The banking industry also
showed improvement, posting record quarterly profits and
capital levels in the second quarter.2
However, third quarter
earnings convey a mixed story, reflecting lower mortgage
demand and other pressures.
There also appear to be several hurdles down the road.
Near-term global growth will likely be subdued, surpassing
three percent only in 2015.3
In the United States, the
expectation is worse: the real GDP growth rate is expected
to be below three percent until 2016.4
The continuing
political gridlock and unresolved fiscal issues are other
factors dampening the current sentiment.