The banking world says new cost reductions are “inevitable” due to weak growth, continual restructuring and renewed pessimism about economic perspectives in Europe. This is according to the European banking barometer EY, an inquiry done with 220 banks in 11 countries, including Belgium. In detail, the bankers asked see a cost reduction of 1.57% on average (more than three times the cost reduction predicted last year) and average income growth of 3.4%, also higher than predicted last year.
The number of staff is expected to fall again in 2015. Staff costs are still 54% of operational costs in the sector. In total, 43% of bankers, and 47% of Belgian bankers, expect a reduction in staff this year. The most affected will be the Scandinavian countries, Italy, and Austria. However, in the UK, new recruitments should overtake sackings.
The bankers questioned by EY predict their loan policies to be relaxed in most sectors. Small and Medium businesses should particularly benefit from this. However, transport, financial services, construction and commercial real estate will all be confronted with more restrictive loan policies by the banks to reduce risks.
The EY study also reveals that Belgian and British banks are more inclined to take staff on, while French banks are prioritising sales. German, Dutch Scandinavian and Swiss banks all predict partnerships. “Risk management has become the priority for banks, including Belgian banks. However, in Belgium we are seeing that investment in innovation has become immensely important, as well as risk management and profitability”, EY concluded.