Markets
Where the World’s Banks Make the Most Money
Where the World’s Banks Make the Most Money
Profits in banking have been steadily on the rise since the financial crisis.
Just last year, the global banking industry cashed in an impressive $1.36 trillion in after-tax profits โ โ the highest total in the sector seen in the last 20 years.
What are the drivers behind revenue and profits in the financial services sector, and where do the biggest opportunities exist in the future?
Following the Money
Today’s infographic comes to us from McKinsey & Company, and it leverages proprietary insights from their Panorama database.
Using data stemming from more than 60 countries, we’ve broken down historical banking profits by region, while also visualizing key ratios that help demonstrate why specific countries are more profitable for the industry.
Finally, we’ve also looked at the particular geographic regions that may present the biggest opportunities in the future, and why they are relevant today.
Banking Profits, by Region
Before we look at what’s driving banking profits, let’s start with a breakdown of annual after-tax profits by region over time.
Banking Profit by Year and Region ($B)
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
---|---|---|---|---|---|---|---|---|---|---|
United States | $19 | $118 | $176 | $263 | $268 | $263 | $291 | $275 | $270 | $403 |
China | $95 | $135 | $174 | $225 | $255 | $278 | $278 | $270 | $301 | $333 |
Western Europe | $78 | $34 | $21 | -$70 | $28 | $95 | $154 | $159 | $186 | $198 |
Rest of World | $196 | $243 | $265 | $285 | $309 | $327 | $348 | $361 | $387 | $421 |
Global ($B) | $388 | $530 | $635 | $703 | $859 | $963 | $1,070 | $1,065 | $1,144 | $1,356 |
In 2018, the United States accounted for $403 billion of after-tax profits in the banking sector โ โ however, China sits in a very close second place, raking in $333 billion.
What’s Under the Hood?
While thereโs no doubt that financial services can be profitable in almost any corner of the globe, what is less obvious is where this profit actually comes from.
The truth is that banking can vary greatly depending on location โ โ and what drives value for banks in one country may be completely different from what drives value in another.
Let’s look at data and ratios from four very different places to get a sense of how financial services markets can vary.
Country | RARC/GDP | Loans Penetration/GDP | Margins (RBRC/Total Loans) | Risk Cost Margin |
---|---|---|---|---|
United States | 5.4% | 121% | 5.0% | 0.4% |
China | 6.6% | 147% | 6.0% | 1.4% |
Singapore | 13.0% | 316% | 4.6% | 0.4% |
Finland | 3.4% | 133% | 2.8% | 0.2% |
Global Average | 5.1% | 124% | 5.0% | 0.8% |
1. RARC / GDP (Revenues After Risk Costs / GDP)
This ratio shows compares a countryโs banking revenues to overall economic production, giving a sense of how important banking is to the economy. Using this, you can see that banking is far more important to Singapore’s economy than others in the table.
2. Loans Penetration / GDP
Loans penetration can be further broken up into retail loans and wholesale loans. The difference can be immediately seen when looking at data on China and the United States:
Country | Retail Loans | Wholesale Loans | Loan Penetration (Total) |
---|---|---|---|
United States | 73% | 48% | 121% |
China | 34% | 113% | 147% |
In America, banks make loans primarily to the retail sector. In China, there’s a higher penetration on a wholesale basis โ usually loans being made to corporations or other such entities.
3. Margins (Revenues Before Risk Costs / Total Loans)
Margins made on lending is one way for bankers to gauge the potential of a market, and as you can see above, margins in the United States and China are both at (or above) the global average. Meanwhile, for comparison, Finland has margins that are closer to half of the global average.
4. Risk Cost Margin (Risk Cost / Total Loans)
Not surprisingly, China still holds higher risk cost margins than the global average. On the flipside, established markets like Singapore, Finland, and the U.S. all have risk margins below the global average.
Future Opportunities in Banking
While this data is useful at breaking down existing markets, it can also help to give us a sense of future opportunities as well.
Here are some of the geographic markets that have the potential to grow into key financial services markets in the future:
- Sub-Saharan Africa
Despite having 16x the population of South Africa, the rest of Sub-Saharan Africa still generates fewer banking profits. With lower loan penetration rates and RARC/GDP ratios, there is significant potential to be found throughout the continent. - India and Indonesia
Compared to similar economies in Asia, both India and Indonesia present an interesting banking opportunity because of their high margins and low loan penetration rates. - China
While China has a high overall loan penetration rate, the retail loan category still holds much potential given the country’s population and growing middle class.
A Changing Landscape in Banking
As banks shift focus to face new market challenges, the next chapter of banking may be even more interesting than the last.
Add in the high stakes around digital transformation, aging populations, and new service opportunities, and the distance between winners and losers could lengthen even more.
Where will the money in banking be in the future?
Markets
Mapped: GDP Growth Forecasts by Country, in 2023
The global economy faces an uncertain future in 2023. This year, GDP growth is projected to be 2.9%โdown from 3.2% in 2022.

Mapped: GDP Growth Forecasts by Country, in 2023
This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.
Since Russiaโs invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023.
High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later.
For European economies, energy prices are critical. The good news is that prices have fallen recently since March highs, but the continent remains on shaky ground.
The above infographic maps GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.
2023 GDP Growth Outlook
The world economy is projected to see just 2.9% GDP growth in 2023, down from 3.2% projected for 2022.
This is a 0.2% increase since the October 2022 Outlook thanks in part to Chinaโs reopening, higher global demand, and slowing inflation projected across certain countries in the year ahead.
With this in mind, we show GDP growth forecasts for 191 jurisdictions given multiple economic headwindsโand a few emerging bright spots in 2023.
Country / Region | 2023 Real GDP % Change (Projected) |
---|---|
๐ฆ๐ฑ Albania | 2.5% |
๐ฉ๐ฟ Algeria | 2.6% |
๐ฆ๐ด Angola | 3.4% |
๐ฆ๐ฌ Antigua and Barbuda | 5.6% |
๐ฆ๐ท Argentina* | 2.0% |
๐ฆ๐ฒ Armenia | 3.5% |
๐ฆ๐ผ Aruba | 2.0% |
๐ฆ๐บ Australia* | 1.6% |
๐ฆ๐น Austria | 1.0% |
๐ฆ๐ฟ Azerbaijan | 2.5% |
๐ง๐ญ Bahrain | 3.0% |
๐ง๐ฉ Bangladesh | 6.0% |
๐ง๐ง Barbados | 5.0% |
๐ง๐พ Belarus | 0.2% |
๐ง๐ช Belgium | 0.4% |
๐ง๐ฟ Belize | 2.0% |
๐ง๐ฏ Benin | 6.2% |
๐ง๐น Bhutan | 4.3% |
๐ง๐ด Bolivia | 3.2% |
๐ง๐ฆ Bosnia and Herzegovina | 2.0% |
๐ง๐ผ Botswana | 4.0% |
๐ง๐ท Brazil* | 1.2% |
๐ง๐ณ Brunei Darussalam | 3.3% |
๐ง๐ฌ Bulgaria | 3.0% |
๐ง๐ซ Burkina Faso | 4.8% |
๐ง๐ฎ Burundi | 4.1% |
๐จ๐ป Cabo Verde | 4.8% |
๐จ๐ฒ Cameroon | 4.6% |
๐ฐ๐ญ Cambodia | 6.2% |
๐จ๐ฆ Canada* | 1.5% |
๐จ๐ซ Central African Republic | 3.0% |
๐น๐ฉ Chad | 3.4% |
๐จ๐ฑ Chile | -1.0% |
๐จ๐ณ China* | 5.3% |
๐จ๐ด Colombia | 2.2% |
๐ฐ๐ฒ Comoros | 3.4% |
๐จ๐ท Costa Rica | 2.9% |
๐จ๐ฎ Cรดte d'Ivoire | 6.5% |
๐ญ๐ท Croatia | 3.5% |
๐จ๐พ Cyprus | 2.5% |
๐จ๐ฟ Czech Republic | 1.5% |
๐จ๐ฉ Democratic Republic of the Congo | 6.7% |
๐ฉ๐ฐ Denmark | 0.6% |
๐ฉ๐ฏ Djibouti | 5.0% |
๐ฉ๐ฒ Dominica | 4.9% |
๐ฉ๐ด Dominican Republic | 4.5% |
๐ช๐จ Ecuador | 2.7% |
๐ช๐ฌ Egypt* | 4.0% |
๐ธ๐ป El Salvador | 1.7% |
๐ฌ๐ถ Equatorial Guinea | -3.1% |
๐ช๐ท Eritrea | 2.9% |
๐ช๐ช Estonia | 1.8% |
๐ธ๐ฟ Eswatini | 1.8% |
๐ช๐น Ethiopia | 5.3% |
๐ซ๐ฏ Fiji | 6.9% |
๐ซ๐ฎ Finland | 0.5% |
๐ซ๐ท France* | 0.7% |
๐ฒ๐ฐ North Macedonia | 3.0% |
๐ฌ๐ฆ Gabon | 3.7% |
Georgia | 4.0% |
Germany* | 0.1% |
Ghana | 2.8% |
Greece | 1.8% |
Grenada | 3.6% |
Guatemala | 3.2% |
Guinea | 5.1% |
Guinea-Bissau | 4.5% |
Guyana | 25.2% |
Haiti | 0.5% |
Honduras | 3.5% |
Hong Kong SAR | 3.9% |
Hungary | 1.8% |
Iceland | 2.9% |
India* | 6.1% |
Indonesia* | 4.8% |
Iraq | 4.0% |
Ireland | 4.0% |
Iran* | 2.0% |
Israel | 3.0% |
Italy* | 0.6% |
Jamaica | 3.0% |
Japan* | 1.8% |
Jordan | 2.7% |
Kazakhstan* | 4.3% |
Kenya | 5.1% |
Kiribati | 2.4% |
South Korea* | 1.7% |
Kosovo | 3.5% |
Kuwait | 2.6% |
Kyrgyz Republic | 3.2% |
Lao P.D.R. | 3.1% |
Latvia | 1.6% |
Lesotho | 1.6% |
Liberia | 4.2% |
Libya | 17.9% |
Lithuania | 1.1% |
Luxembourg | 1.1% |
Macao SAR | 56.7% |
Madagascar | 5.2% |
๐ฒ๐ผ Malawi | 2.5% |
๐ฒ๐พ Malaysia* | 4.4% |
๐ฒ๐ป Maldives | 6.1% |
๐ฒ๐ฑ Mali | 5.3% |
๐ฒ๐น Malta | 3.3% |
๐ฒ๐ญ Marshall Islands | 3.2% |
๐ฒ๐ท Mauritania | 4.8% |
๐ฒ๐บ Mauritius | 5.4% |
๐ฒ๐ฝ Mexico* | 1.7% |
๐ซ๐ฒ Micronesia | 2.9% |
๐ฒ๐ฉ Moldova | 2.3% |
๐ฒ๐ณ Mongolia | 5.0% |
๐ฒ๐ช Montenegro | 2.5% |
๐ฒ๐ฆ Morocco | 3.1% |
๐ฒ๐ฟ Mozambique | 4.9% |
๐ฒ๐ฒ Myanmar | 3.3% |
๐ณ๐ฆ Namibia | 3.2% |
๐ณ๐ท Nauru | 2.0% |
๐ณ๐ต Nepal | 5.0% |
๐ณ๐ฑ Netherlands* | 0.6% |
๐ณ๐ฟ New Zealand | 1.9% |
๐ณ๐ฎ Nicaragua | 3.0% |
๐ณ๐ช Niger | 7.3% |
๐ณ๐ฌ Nigeria* | 3.2% |
๐ณ๐ด Norway | 2.6% |
๐ด๐ฒ Oman | 4.1% |
๐ต๐ฐ Pakistan* | 2.0% |
๐ต๐ผ Palau | 12.3% |
๐ต๐ฆ Panama | 4.0% |
๐ต๐ฌ Papua New Guinea | 5.1% |
๐ต๐พ Paraguay | 4.3% |
๐ต๐ช Peru | 2.6% |
๐ต๐ญ Philippines* | 5.0% |
๐ต๐ฑ Poland* | 0.3% |
๐ต๐น Portugal | 0.7% |
๐ต๐ท Puerto Rico | 0.4% |
๐ถ๐ฆ Qatar | 2.4% |
๐จ๐ฌ Republic of Congo | 4.6% |
๐ท๐ด Romania | 3.1% |
๐ท๐บ Russia* | 0.3% |
๐ท๐ผ Rwanda | 6.7% |
๐ผ๐ธ Samoa | 4.0% |
๐ธ๐ฒ San Marino | 0.8% |
๐ธ๐น Sรฃo Tomรฉ and Prรญncipe | 2.6% |
๐ธ๐ฆ Saudi Arabia* | 2.6% |
๐ธ๐ณ Senegal | 8.1% |
๐ท๐ธ Serbia | 2.7% |
๐ธ๐จ Seychelles | 5.2% |
๐ธ๐ฑ Sierra Leone | 3.3% |
๐ธ๐ฌ Singapore | 2.3% |
๐ธ๐ฐ Slovak Republic | 1.5% |
๐ธ๐ฎ Slovenia | 1.7% |
๐ธ๐ง Solomon Islands | 2.6% |
๐ธ๐ด Somalia | 3.1% |
๐ฟ๐ฆ South Africa* | 1.2% |
๐ธ๐ธ South Sudan | 5.6% |
๐ช๐ธ Spain* | 1.1% |
๐ฑ๐ฐ Sri Lanka | -3.0% |
๐ฐ๐ณ St. Kitts and Nevis | 4.8% |
๐ฑ๐จ St. Lucia | 5.8% |
๐ป๐จ St. Vincent and the Grenadines | 6.0% |
๐ธ๐ฉ Sudan | 2.6% |
๐ธ๐ท Suriname | 2.3% |
๐ธ๐ช Sweden | -0.1% |
๐จ๐ญ Switzerland | 0.8% |
๐น๐ผ Taiwan | 2.8% |
๐น๐ฏ Tajikistan | 4.0% |
๐น๐ฟ Tanzania | 5.2% |
๐น๐ญ Thailand* | 3.7% |
๐ง๐ธ The Bahamas | 4.1% |
๐ฌ๐ฒ The Gambia | 6.0% |
๐น๐ฑ Timor-Leste | 4.2% |
๐น๐ฌ Togo | 6.2% |
๐น๐ด Tonga | 2.9% |
๐น๐น Trinidad and Tobago | 3.5% |
๐น๐ณ Tunisia | 1.6% |
๐น๐ท Turkey* | 3.0% |
๐น๐ฒ Turkmenistan | 2.3% |
๐น๐ป Tuvalu | 3.5% |
๐บ๐ฌ Uganda | 5.9% |
๐บ๐ฆ Ukraine | N/A |
๐ฆ๐ช United Arab Emirates | 4.2% |
๐ฌ๐ง United Kingdom* | -0.6% |
๐บ๐ฒ U.S.* | 1.4% |
๐บ๐พ Uruguay | 3.6% |
๐บ๐ฟ Uzbekistan | 4.7% |
๐ป๐บ Vanuatu | 3.1% |
๐ป๐ช Venezuela | 6.5% |
๐ป๐ณ Vietnam | 6.2% |
West Bank and Gaza | 3.5% |
๐พ๐ช Yemen | 3.3% |
๐ฟ๐ฒ Zambia | 4.0% |
๐ฟ๐ผ Zimbabwe | 2.8% |
*Reflect updated figures from the January 2023 IMF Update.
The U.S. is forecast to see 1.4% GDP growth in 2023, up from 1.0% seen in the last October projection.
Still, signs of economic weakness can be seen in the growing wave of tech layoffs, foreshadowed as a white-collar or โPatagonia-vestโ recession. Last year, 88,000 tech jobs were cut and this trend has continued into 2023. Major financial firms have also followed suit. Still, unemployment remains fairly steadfast, at 3.5% as of December 2022. Going forward, concerns remain around inflation and the path of interest rate hikes, though both show signs of slowing.
Across Europe, the average projected GDP growth rate is 0.7% for 2023, a sharp decline from the 2.1% forecast for last year.
Both Germany and Italy are forecast to see slight growth, at 0.1% and 0.6%, respectively. Growth forecasts were revised upwards since the IMF’s October release. However, an ongoing energy crisis exposes the manufacturing sector to vulnerabilities, with potential spillover effects to consumers and businesses, and overall Euro Area growth.
China remains an open question. In 2023, growth is predicted to rise 5.2%, higher than many large economies. While its real estate sector has shown signs of weakness, the recent opening on January 8th, following 1,016 days of zero-Covid policy, could boost demand and economic activity.
A Long Way to Go
The IMF has stated that 2023 will feel like a recession for much of the global economy. But whether it is headed for a recovery or a sharper decline remains unknown.
Today, two factors propping up the global economy are lower-than-expected energy prices and resilient private sector balance sheets. European natural gas prices have sunk to levels seen before the war in Ukraine. During the height of energy shocks, firms showed a notable ability to withstand astronomical energy prices squeezing their finances. They are also sitting on significant cash reserves.
On the other hand, inflation is far from over. To counter this effect, many central banks will have to use measures to rein in prices. This may in turn have a dampening effect on economic growth and financial markets, with unknown consequences.
As economic data continues to be released over the year, there may be a divergence between consumer sentiment and whether things are actually changing in the economy. Where the economy is heading in 2023 will be anyone’s guess.
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