Risk & Economy » Disruption » 55% of global banks report rising interest rates have negatively impacted asset growth

55% of global banks report rising interest rates have negatively impacted asset growth

Demica’s annual Benchmark Report survey shows how banks are diversifying in response with an increased focus on risk distribution

More than half of global banks (55%) said rising interest rates had negatively affected non-documentary trade finance asset growth, and 44% noted that geopolitical risks had adversely affected growth.

In response to this, 52% of banks are planning to move into new product lines in 2024 (compared with 41% last year) and 27% of banks identified Trade Receivables products as having the most growth potential, overtaking Payables products for the first time since the report began.

Despite considerable headwinds, banks remain cautiously optimistic. Demica found that even in harsh market conditions, eight-in-ten banks (81%) surveyed expect to see their supply chain finance assets grow over the next 12 months, with more than a third (35%) predicting increases in asset sizes of more than 10%.

Demica surveyed 169 supply chain finance professionals in 31 countries for this year’s Demica’s 2024 Benchmark Report for Banks in Trade Finance.

“Supply chain finance is demonstrating robust growth despite the uncertainty in the global economy. Payables financing may have suffered from high interest rates but banks are continuing to see growth in asset sizes and are focusing on receivables products which are more appealing in the current market environment,” said Matt Wreford of Demica.

“What our Benchmark Report shows is that non-documentary trade finance products remain ideal for meeting corporate financing requirements even when interest rates are high, thanks to its flexibility and the diversity of products and services. Banks have every reason to expect further asset growth over the next 12 months.”

Demica surveyed banks operating in trade and supply chain finance around the world throughout November 2023 and January 2024. The survey was shared with Demica’s network, and by third-party organisations with their networks including GTR, BAFT and ITFA. A total of 169 anonymised responses was received from supply chain finance professionals in 40 countries across the Americas, Asia-Pacific, Europe, the Middle East and Africa.

Respondents were split across different teams and roles within trade finance banks.

To access the full report contact: https://www.demica.com/resource/demicas-2024-benchmark-report-for-banks-in-trade-finance/.


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