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What explains the difference between the 40 percent of banks that create value and the 60 percent that destroy it? In short, geography, scale, differentiation, and business model.
A decade on from the global financial crisis, signs that the banking industry has entered the late phase of the economic cycle are clear: growth in volumes and top-line revenues is slowing with loan growth of just four percent in 2018—the lowest in the past five years and a good 150 basis points below nominal GDP growth. Yield curves are also flattening. And, though valuations fluctuate, investor confidence in banks is weakening once again.
Industry veterans have been through a few of these cycles before. But, notwithstanding the academic literature,(1) this one seems...
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