Trade finance revenue remained stable for banks last year, with Europe showing slight declines while the Middle East and Brazil reported growth. Uncertainties for 2025 loom due to U.S. trade policies. HSBC and Standard Chartered noted shifts in the trade landscape, with banks aiming to tap into intra-regional opportunities.
Trade finance revenue reported by banks maintained stability over the past year, though various regions experienced notable growth. According to a review by GTR of financial results from late January to early March, banks in European and Asian financial centers registered mostly steady revenue or slight declines. Generally, the sentiment among lenders in Europe appeared more optimistic compared to 2023, despite limited information shared about their trade activities.
Conversely, banks in the Middle East and Brazil experienced significant growth in their trade finance sectors. Many financial institutions expressed concerns over a turbulent 2025 due to unpredictable tariff regulations and retaliatory measures stemming from U.S. trade policies. HSBC remarked that “already, it appears that the improvement in world trade growth may be starting to falter” following a brief recovery during the first half of 2024.
While the World Trade Organization indicated positive trade performance towards the year’s end, concerns surrounding potential shifts in trade policy clouded the outlook for 2025. Notably, some banks in Asia identified opportunities for intra-regional trade amidst disruptions related to U.S. policies. For instance, DBS plans to concentrate on enhancing trade relations with North Asia and Europe.
The manner in which banks disclose trade finance volume and income varies significantly, thereby resulting in incomplete global insights. Notably, many large U.S. and European banks refrain from disclosing detailed revenue figures related to trade operations. Full-year results from banks in major economies such as China and India are anticipated later.
In terms of financial performance, HSBC’s Global Trade Solutions division reported a minor increase of 1%, rising to $1.99 billion in 2024. The bank attributed this to increased fee income from guarantees, while sales in its Canadian operations had an offsetting impact. The last quarter of the year saw a 10% growth in trade revenue quarter-on-quarter.
Standard Chartered expressed optimism regarding opportunities in emerging markets despite reporting a 2% decrease in trade and working capital income year-on-year. The bank recognized a notable increase in income from sustainable trade and working capital contributions. Meanwhile, Société Générale noted stable performance across both trade notes and export loans.
In Italy, UniCredit experienced a 5% increase in fees from trade and correspondent banking compared to the prior year. Meanwhile, the Nordic banks reported strong demand for trade finance products, with SEB noting significant engagement from large corporate clients. Handelsbanken highlighted a substantial increase in outstanding irrevocable letters of credit, indicating robust export performance.
In Singapore, DBS reported a 4% decrease in trade income due to lower average volumes, while OBC recorded a modest decline in trade-related income. Conversely, UOB recognized a 20% increase in trade loans. Hong Kong’s Hang Seng Bank experienced a year-on-year drop in trade finance loan values.
In the Middle East, trade finance revenue remained robust, particularly in the UAE and Saudi Arabia, where banks reported growth in both revenues and volumes. For instance, the First Abu Dhabi Bank recorded a 17% growth year-on-year in its net fee and commission income from trade finance. The Saudi National Bank also reported a substantial increase in its trade finance fee income.
In the Americas, Brazilian lenders saw a continuation of their positive trend in trade finance. For instance, Bradesco reported significant increases in import letters of credit, with an overall upsurge in foreign trade finance. In contrast, Citi reported a 6% revenue increase in its treasury and trade solutions unit, showcasing sustained demand for export and working capital loans and reflecting improvement in both interest and non-interest revenues.
The evaluation of trade finance highlights a steady performance amidst growth in specific regions such as the Middle East and Brazil. While European and Asian banks have shown resilience, uncertainties loom over global trade dynamics driven by fluctuating U.S. policies. Institutions like HSBC and Standard Chartered are adapting strategies to capitalize on emerging trade opportunities, while financial institutions in the Middle East are displaying encouraging results. The landscape of trade finance is shifting, influenced by global economic changes and regional demands.
Original Source: www.gtreview.com
