Banks will focus on lowering costs in 2024, industry executives told the Financial Times Global Banking Summit last month.
Next year will be a period of uncertainty for the sector if the global economy slows down as expected. Slower economic growth is a drag on loan growth, while outstanding loans to households and non-financial corporates were flat on a quarterly basis, the European Banking Authority reported in early October.
Lenders are going to focus on three key tasks things, according to Alexandra Soto, chief operating officer at financial advisory and asset management firm Lazard: lowering costs, enhancing digital capabilities and reducing interest exposure.
Operating costs dynamics at major worldwide lenders have followed divergent paths.
Citigroup’s reached $50bn at the end of 2022, while Crédit Agricole has been able to keep the metric almost stable over the past few years.
Banks worldwide have announced significant job cuts. Citigroup was reported in early November to be considering job cuts of at least 10% in major businesses. Barclays is exploring a plan to drop thousands of its investment banking clients as part of a strategy to cut costs while Wells Fargo is setting aside as much as $1bn for “unanticipated” severance costs in the fourth quarter of this year.
Job cuts in investment banking are also on the cards because advisory and capital markets underwriting revenues have declined since the beginning of 2022.
