Bank of China and ICBC make headway in Asian trade services
(28 July 2017 – Asia) Two of China’s Big Four state-owned banks – the Bank of China and ICBC – have in recent years been making their mark in the trade finance market in Asia while domestic banks in Singapore have retreated, the latest research from banking analysts East & Partners Asia has found.
The Asian Institutional Trade Finance (ATF) program, which monitors demand in the top 100 revenue ranked businesses for trade finance, engagements, products and relationships across ten key markets in Asia (China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand), found that Bank of China and ICBC recorded staggering market share growth rates of 68.8 percent and 27.3 percent respectively over the past three years.
The report shows that wallet share positioning as primary trade finance bank continues to slowly decline broadly across the market as corporates further split their trade relationship across their banking relationships. However, Bank of China and ICBC are two of only a few regional banks that have managed to buck the trend. The other three regional banks that follow suit are Maybank, Mitsubishi UJF and Sumitomo Mitsui FG.
These findings are not all that surprising given Bank of China’s pricing competitiveness. According to the research, the Bank has maintained its long-standing top position among financial providers serving the Asia market in terms of offering competitive pricing for its clients. These Chinese banks are also expanding abroad to diversify their income sources and take advantage of the China’s One Belt, One Road global initiative which creates thriving opportunities across the region for them to further establish their ground.
In the process of serving its customers and participating in the international market, Bank of China and ICBC are increasingly capturing mind share. Between 2014 and 2017, their trade finance share of mind grew by 45.5 percent and 84.6 percent respectively to nearly 5.0 percent and 3.0 percent respectively.
East predicts Bank of China and ICBC will break 10.0 percent cumulative primary trade finance market share in about nine years.
On the other hand, domestic banks in Singapore (DBS, OCBC and UOB) are under pressure having lost ground for the third consecutive round. The cumulative market share of these three banks has shrunk by 10.4 percent since the second half of 2014 to 12.9 percent.
It is important to note, however, that despite these lackluster performances, DBS, OCBC and UOB still rank among the top five trade finance providers in Asia in terms of trade credit process – the most important service attribute for institutional customers.