1. Global trend of the banking industry
Group 4
Peter Wong Ho Yin
Ken Leung Ngo Hang
Kenny Cheung Kin Yan
Frederick Ho Chu Fai

2. Overview
Global trend of banking industry
Competition
Prospects

3. Global trend of banking industry
1. Globalization
2. Advanced Technology
3. Shareholder Value

4. Global trend of banking industry
Globalization
mean internationalization of the marketplace.
Competition between domestic and foreign
E.g. China entry WTO, HSBC and HI
“ Big Bang” the Financial Services Act of 1986 in British market

5. Global trend of banking industry
Technology
Make the financial service borderless
Customer increase demanding
Winner under technology

6. Global trend of banking industry
Emphasis on shareholder value
Every critical business decision is from the value of shareholder

7. Competition Investment Banks vs Commercial Banks
Investment banking
Trading & principal investment
Asset management
Investment Banks
Commercial Banks

8. Investment Bank - Profitability
Consecutively decreasing total revenue in recent 2 years
E.g. Goldman Sachs
Profit-making activities
Investment banking
Trading and principal investments
Asset management and securities services

9. Goldman Sachs – Profitability
Revenue ($ in millions)
2002
2001
2000
I. Investment banking
$2830
(↓26%)
$3836
(↓29%)
$5371+
II. Trading and principal investments
5249
6349
6627
III. Asset management and securities services
5907
(↑5%)
5626
(↑18%)
4592
Total
$13986
(↓12%)
$15811
(↓5%)
$16590

10. Goldman Sachs – Profitability(cont)
I. Investment banking
Revenue (millions)
2002
2001
2000
Financial Advisory
$1499
(↓28%)
$2070
(↓20%)
$2592
Underwriting
1331
(↓25%)
1766
(↓36%)
2779
Total
$2830
(↓26%)
$3836
(↓29%)
$5371

11. Goldman Sachs – Profitability(cont)
II. Trading and principal investments
Revenue (millions)
2002
2001
2000
FICC (Fixed Income, Currency, Commodities)
$4470
$4047
$3004
Equities
1008
2923
3489
Principal Investments
(229)
(621)
134
Total
$5249
$6349
$6627

12. Goldman Sachs – Profitability(cont)
III. Asset management and securities services
Revenue (millions)
2002
2001
2000
Asset Management
$1653
(↑12%)
$1473
(↑10%)
$1345
Securities Services
981
(↓13%)
1133
(↑21%)
940
Commissions
3273
(↑8%)
3020
(↑31%)
2307
Total
$5907
(↑5%)
$5626
(↑18%)
$4592

13. Goldman Sachs – Profitability(cont)
Characteristic
I. Investment banking revenue drops significantly:
$5.37b drops to $3.84b drops to $2.83b
III. Asset management and securities services grows slightly
$5.91b grows to $5.63b grows to $4.59b

14. Commercial Bank - Profitability
Expanding into the businesses that was mainly done by investment banks
E.g. Bank of America
Having similar businesses as investment banks
Investment banking
Trading-related revenue
Asset management

15. Bank of America – Profitability
I. Investment banking
Income ($ in millions)
2002
2001
Securities underwriting
$721
(↓9%)
$796
Syndications
427
(↑8%)
395
Advisory services
288
(↑15%)
251
Other 45
(↓46%) 84
Total
$1481
(↓3%)
$1526

16. Bank of America – Profitability(cont)
II. Trading-related revenue
Revenue (millions)
2002
2001
Foreign exchange
$530
$541
Interest rate
886
923
Credit
914
887
Equities
384
906
Commodities 86
170
Total
$2800
$3427

17. Bank of America – Profitability(cont)
III. Asset management
Income (millions)
2002
2001
Asset management fees
$1087
(↓4%)
$1129
Brokerage income
435
(↓3%)
450
Total
$1522
1579

18. Bank of America – Profitability(cont)
Characteristic
I. Investment banking income only drops slightly compared to Goldman Sachs
$1.53b drops to $1.48b
III. Asset management drops slightly
$1.58b drops to $1.52b

19. Prospects Globalization - enter emerging markets & invest globally
Innovation
CB – provide one-stop service
IB – develop new kind of derivative in financial market

20. ~Thank You~