The global banking industry shows many signs of renewed health. The recovery from the financial crisis is complete, capital stocks have been replenished, and banks have taken an axe to costs. Yet profits remain elusive. For the seventh consecutive year, the industry’s return on equity (ROE) is stuck in a narrowly defined range, between 8 percent and the 10 percent figure that most consider the industry’s cost of equity. At 8.6 percent for 2016, ROE was down a full percentage point from 2015. Further, banks’ shares are trading at low multiples, suggesting that investors have concerns about future profitability. Several regions and business lines have done better, and some institutions are outperforming due to strategic clarity and relentless execution on both their core businesses and their efforts to improve.
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During the Great Recession, friends of mine in the financial industry told me: “We didn’t realise the whole system was rotten, we were slap bang in the middle of it, so how could we?” And now I wonder, could the same be true for the training industry?