Trade finance revenue among banks held steady in 2024, with notable growth in the Middle East and Brazil, while European and Asian lenders faced mixed results. Concerns regarding U.S. trade policies loom, affecting global trade dynamics. Banks are exploring regional opportunities to adapt to these shifts as they prepare for the uncertain landscape of 2025.
The trade finance revenue among banks showcased stability in 2024, with notable growth observed in specific regions. The Global Trade Review (GTR) highlighted that European and Asian financial hubs reported consistent or slightly reduced earnings, while lenders in the Middle East and Brazil achieved commendable performance in their trade finance segments amidst an uncertain economic outlook for 2025.
Despite pockets of growth, banks expressed concerns regarding the unpredictable consequences of U.S. trade policies, particularly the tariffs imposed by President Donald Trump. HSBC indicated that global trade growth might be faltering, contradicting some signs of recovery from earlier months in 2024. The World Trade Organization warned that trade prospects for 2025 appear cloudy due to potential policy shifts.
Some Asian banks remain optimistic, suggesting that trade disruptions may enhance regional trade opportunities. For instance, DBS plans to invest more in trade prospects with North Asia and Europe, while Standard Chartered anticipates benefits in Asian markets due to these disruptions. GTR’s assessment mainly reflects large banks and markets, which skews the understanding of global trade finance performance.
In Europe, HSBC’s Global Trade Solutions division reported a modest revenue increase in 2024, attributed to improved fees and margins, despite factors such as the sale of its Canadian unit. Notably, Standard Chartered is exploring advantages from shifting trade dynamics, even as it reported a slight contraction in its earnings. French banks like Société Générale and BNP Paribas reported stable or improving trade finance figures, contributing positively to their overall performance.
In Asia, results were mixed, with banks like DBS experiencing declines in trade income while UOB reported substantial growth in trade loans. The ongoing trade conflicts have presented challenges, but they may also result in new intra-regional opportunities, particularly with the Regional Comprehensive Economic Partnership (RCEP) initiatives.
Turning to the Middle East, banks in the UAE and Saudi Arabia continued to show robust earnings. First Abu Dhabi Bank and Abu Dhabi Commercial Bank noted increases in trade finance income, despite a decline in the volume of letters of credit. In Saudi Arabia, SAB reported a notable increase in both trade revenues and guarantees, demonstrating a vital growth area for these financial institutions.
In the Americas, Brazil’s trade finance sector exhibited significant growth, with Bradesco and Banco do Brasil reporting remarkable increases in import letters of credit and export financing, respectively. Citi in the U.S. marked a rise in treasury and trade solutions revenue, driven by strong demand for export and working capital loans.
Collectively, the trade finance segment reflects a diverse landscape, with banks navigating uncertainties while leveraging regional opportunities to bolster performance. Global trade dynamics remain complex, influenced heavily by international policies and intra-regional trade potential, indicating the evolving nature of trade finance in 2025.
In summary, while trade finance revenues among banks remained stable overall in 2024, various regions displayed differing performances. European banks faced challenges in maintaining earnings amid fluctuating trade policies, whereas lenders in the Middle East and Brazil experienced notable growth. The trade finance landscape is increasingly shaped by developments in U.S. trade policy and the potential for intra-regional trade opportunities, particularly within Asia and among emerging markets.
Original Source: www.gtreview.com
