Industry Analysis: Banking Essay example -- Essays Papers

Industry Analysis Banking The banking industry has come under increasing pessimism of late because of rising short and long-term invade rates. The banking industrys market capitalization made a substantial decline. Most investors are concerned with whether the industry can sustain continued profitability as a result of these factors.Banks acquire responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental outlook of any financial services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors over the past two years. Interest rates were low, credit quality was good, and inflation was low. These factors are usually predictive of the types of profit banks should report. But good times cant continue because interest rate hikes cause reduced lending activity, damaged credit quality, and reduced values of bond portfolios.Porters v Forces Analysis1.Rivalry among competing sellers The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers damages agreed to merge in April 1998 at a value of $70 billion. Bank of America and Nations Bank also agreed to merge shortly later which became the largest bank in the United States. Bank merg...