Optimism's Soft Underbelly
Published June 21, 2011 11:00 PM
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Updated September 12, 2011 8:33 AM
1 Min Read
Optimism's Soft Underbelly
Bankers are upbeat about the future, but their outlook has grown more cautious in the past year, according to the 2011 Banking Industry Pulse Survey conducted by KPMG LLP. Many expressed confidence in at least moderate revenue growth in the next year, but few had plans that backed up the prediction. Attitudes toward hiring and spending cooled, and fears of regulation hit new highs. The survey was conducted in May and June; it reflects responses of 100 senior bank executives.
Fear of new regulations may be well founded, especially for big banks. The economy "is going to pick up. The regulatory changes are going to be permanent."
Jason Goldberg, Barclays PLC analyst
Optimism's Soft Underbelly
Interest in M&A seemed stronger in these answers, but few admit to being a potential seller.
Optimism's Soft Underbelly
Reinvesting in the business was heavily favored over acquisitions.
Optimism's Soft Underbelly
Their fears about the impact of credit card regulations, the Durbin amendment cap on debit interchange fees, Regulation E and other regulatory changes came through loud and clear here.
Optimism's Soft Underbelly
These answers still raise more questions about the source of new revenues. Innovation takes a back seat to compliance, cost reduction and process tweaks.
Optimism's Soft Underbelly
Plans to strengthen the top line rely heavily on traditional products and trading. Executives were relatively high on mobile payments.
Optimism's Soft Underbelly
(Left chart) They were surprisingly upbeat about revenue prospects in the next year. The reasons are not completely clear.
(Right chart) The mood on hiring was sober. Nearly a quarter said they will never have a staff as big as they had in 2007.
Optimism's Soft Underbelly
"People used to say things will get better at the end of 2010. … The optimism used to be dealing with quarters. This time, it seems to be, 'It's not going to get good for a couple of years — let's be honest.'"
Tony Anzevino, leader of KPMG's banking practice
