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European banks: Healing continues

June 11, 2015
Region:
European banks had a successful start into 2015. Business activity improved, asset quality did so as well and profitability rose again, as the rebalancing of the industry made further progress. The ECB’s new large-scale market interventions helped strengthen sentiment in financial markets, and contributed to the continuing decline in the euro exchange rate – which on balance may have been beneficial for banks. [more]

More documents contained in "Talking Point"

155 (109-120)
August 19, 2015
109
Between 2000 and 2014, unit passenger car sales grew by 27.5% in China on average – per year. However, for the past several months there have been signs of the dynamic growth petering out; from May to July 2015 sales were in fact down 1.3% on the corresponding year-earlier level. The average growth of car demand in China is poised to plummet to a single-digit rate in the next few years. This is a step towards "normality". The anticipated slower growth in demand for passenger cars – coupled with growing production capacities in China for the time being – are likely to lead to further intensifying price and competitive pressures in the Chinese market. German makers of premium-segment cars will be unable to escape completely unscathed from the impact of such a trend. [more]
August 17, 2015
Region:
110
Big data is a hot topic. The large digital platform operators in particular have long recognised the economic potential of algorithm-based data analysis. They demonstrate this to billions of customers professionally every day. With their analytical technologies they generate high revenues and tie us loyal customers ever more firmly to their platforms via convenient and, above all, individualised services. A steadily growing number of companies want to imitate this lucrative lock-in effect so they can also capitalise on the benefits of big data. Nonetheless, in many sectors the implementation of modern data analysis tools is proceeding only sluggishly. Contrary to the expectations of some market participants, big data is not a simple add-on. [more]
August 14, 2015
Region:
111
For the average German a sack of rice falling over in China has long been none of his business. In the meantime, however, the importance of events in China for the German economy has come to be recognised. China's unexpectedly weak economic indicators and the fluctuations in the Chinese stock market have increased the scepticism over recent months about whether China will achieve the growth target set by the government for this year of around 7%. Our China economist remains confident that the Chinese economy will stabilise following expected GDP growth of nearly 7% yoy in Q3 thanks to the support measures instigated by the government. However, German exporters are already having to contend with a marked softening of demand from China. [more]
August 11, 2015
Region:
Analyst:
112
Given the merely average state of communications infrastructure in Germany today, this country could fall behind in the international competition to attract investment. This worry is exacerbated by the fact that even within Germany there is a risk of a significant gulf developing between the regions. However, while broadband expansion is indeed making progress in the densely populated regions, major challenges exist in rural regions with respect to return on investment. When it comes to bridging systemic profitability gaps, the government will have to step into the breach if such projects are also to progress. The funding additionally earmarked in the federal budget and the revenues currently generated from "Digital Dividend II" should provide stimuli for expansion. However, despite government aid it must always be clear that broadband expansion can only be profitable in the first place if modern networks are complemented with modern services. [more]
August 10, 2015
Region:
Analyst:
113
German manufacturers increased output by 0.2% qoq in real terms in Q2 2015. However, growth will probably be slower in H2 than anticipated to date. Therefore, we are revising our forecast for 2015 output to the downside – from 1.5% so far to 1% (both in real terms). The moderate uptrend is roughly set to continue in 2016. Manufacturing output could climb by 1% again in the coming year. This means its growth rate would continue to fall short of the long-term average. Furthermore, manufacturing's share in Germany's total gross value-added would decline. [more]
August 5, 2015
Region:
114
As one possible way of reacting to the loss of our data sovereignty, efforts should be taken to launch education campaigns without delay (ideally on an international basis). This can help to establish greater internet and media expertise among the population at large in the medium to long run. Furthermore, an international legal framework would be desirable in order to regulate the use of data and algorithm-based technologies as well as limiting lax data-collection practices. [more]
July 28, 2015
Region:
115
Debate over blockchain technology is raging in many online and offline media at present. In principle, the technology constitutes a decentralised ledger system that can be coordinated via peer-to-peer (P2P) networks. Any ownership or security issues arising in connection with the decentralised transactions conducted across the ledger system are handled by P2P mechanisms as well, i.e. also without a central node. Ownership status is established via the digital exchange of cryptographic keys (public vs private), while fraudulent transactions can largely be ruled out with the help of the cryptographic 'proof of work' system. Using a proof of work, blockchain technology enables the rapid, inexpensive transfer of assets and financial products between individuals who neither know nor trust one another, without a compelling need for an intermediary to reduce existing information asymmetries. [more]
July 20, 2015
Region:
116
If all goes well, the Iranian economy could begin to reintegrate into the world economy in early 2016. This harbours opportunities especially for Iran itself and its 80 million inhabitants. However, it is also likely to provide a moderate stimulus to world trade and German exports. In addition, increased Iranian oil production could dampen oil prices and thus support the growth of real income of German households. [more]
July 13, 2015
Region:
Analyst:
117
Euro area money market funds have returned to growth, according to the latest ECB data. By March 2015, they managed EUR 1,032 bn in assets, up by EUR 120 bn from a year earlier. A similar surge in assets was last seen before the financial crisis, which marked the beginning of a prolonged decline.
Amazingly, the upward trend in assets occurred while money market yields hit record lows, especially for the euro. So what is really behind MMF asset growth? [more]
July 3, 2015
Region:
118
The digital strategies currently unveiled by traditional banks do not go far enough and often deliver only fragmented silo solutions. With each division “doing its own thing” and adopting the silo principle that stifles innovation, many (digital) financial innovations are primarily experienced at the client front-end and are also warmly welcomed. However, the banks will not achieve resounding success using such methods. [more]
June 30, 2015
Region:
119
These days, financial market commentaries are often laced with expressions such as "topsy-turvy" and "Alice in Wonderland". Recently, even Bank of Japan Governor Kuroda described the need for unconditional faith in the inflationary impact of Japanese monetary policy with a reference to Peter Pan, quoting Peter as saying that (in his world) "the moment you doubt whether you can fly, you cease forever to be able to do it". [more]
June 26, 2015
Region:
Analyst:
120
The average age of cars on German roads hit a new record high of nine years at the beginning of 2015. The primary reason for this is the improved quality of vehicles. Although the diesel share of new car registrations has averaged well over 40% in recent years, diesel only constituted 31% of the cars on German roads at last count. The durability of cars is causing the mix of cars in service to change only slowly. The diesel car example suggests that it may take many years before cars powered by alternative technologies constitute a major share of all the cars registered in Germany. The vision of a future with largely climate-neutral or locally emission-free vehicles on German roads by 2050 is virtually unattainable as things currently stand. [more]
7.6.3