China is expected to overtake the US to become the world's biggest banking economy by 2023. This is 20 years earlier than predicted before the financial crisis. The country's domestic banking assets are also expected to exceed US$30 trillion by 2030. These findings were revealed in PwC's "Banking in 2050" report.
"The study does not come as a surprise. Three of the largest banks in the world by market cap are Chinese. Chinese banks remain financially sound thanks to the banking reforms put in place since the aftermath of the Asian financial crisis almost 15 years ago. The outlook remains stable and its banks have adequate cushions against rising NPLs," says Raymond Yung, PwC Financial Services Leader for China.
Meanwhile, India could overtake Japan to become the third largest domestic banking industry by 2035, after China and the US, if it continues to pursue growth-friendly policies. In the longer term, it could potentially overtake China as China's rate of growth rate slows down over time due to its rapidly ageing population, a result of its one-child policy.
Changes in regulation since the financial meltdown will also play a profound role in the development of the banking sector as the industry continues to evolve in the next few decades, says the PwC report.
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