Cash balances swell as companies avoid risk

Cash management revenue generated by the world’s 10 largest transaction banks rose 26% in the first half of this year compared to the same period in 2021, according to the Coalition Index for Transaction Banking.

This increase was attributed to cash and balances benefiting from interest rate increases in major economies, and continued growth in payables and receivables.

Rising interest rates in an inflationary environment and increased deposit growth from risk-averse, safety-oriented businesses drove balance sheet-based trade revenue from cash management and trade finance services in most transaction banks in the world.

In trade finance, the impact of rising interest rates is not a positive factor

Marie-Laure Gastellu, Societe Generale

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Unlocking working capital and managing risk are even more important for companies when the macroeconomic environment is as uncertain as it is today, says Faiz Ahmad, head of global transaction services at Bank of America (BofA) – one of the banks covered in the Coalition report.

“There is growth in accounts payable solutions, such as supply chain finance, but we are also seeing increased interest in inventory and accounts receivable solutions,” he says.

Sriram