The recent healthcare crisis has had cascading consequences on the economy. The chief executive officer of one of the country’s premier financial institutions has provided a few choice words on the effect this is starting to have in the banking industry. Less than two decades ago the world was rocked by the financial emergency that was brought on by the financial sector of the US due to reckless investment decisions by commercial banks. Will the next few months look like a slow-motion replay of 2008 or something else this time around?
Leading Statistics and Market Performance metrics in the Banking sector
There has been an consequence on more than only one banking institution and in more than one economic activity. This is the most extensive disturbance that the system has seen since the Great Depression by some reports. At the starting of the year, banks around the world were regularly setting records on quarterly earnings and yearly profits. Today numerous banks are beginning to question if there is a risk they could lose solvency without government support.
Latest Trading Activities are very encouraging
This is the one bright spot in the market for banks right now. After some of the recent government intervention and the quantitative easing by the Federal Reserve, there has been a improvement to the stock values. The only major drawback here is there is still quite some distance to go up before they return to past highs.
Wealth Management Activities are not as encouraging as trading activities
Wealth management has come to be an extremely large part of most banking institution’s revenue sources over the last few decades. Morgan Stanley, for example, has declared roughly half of their yearly revenue comes from this division of their organization. This division also saw a drop of nearly 8% in the last quarter in this area.
Fourteen percent drop in Investment Management activity is cause for concern
Today it is not solely the wealthy who invest. More and more people from many socioeconomic classes have been able to have access to investments. This has generated a major share of the revenue stream for Morgan Stanley roughly one quarter what their wealth management generated for the company. This division fell by 14 percent in the last quarter as well.