BIS international banking statistics at end-December 2018

• Global cross-border bank claims continued to expand at an annual pace of 1%. They rose by $134 billion during Q4 2018, to stand at $29 trillion at end-2018.
• The overall expansion was driven mostly by cross-border claims on non-banks, especially non-bank financial institutions (NBFIs), which grew by 8% annually.
• The annual growth of cross-border claims on emerging market and developing countries (EMDEs) slowed to 3% as of end-2018. Claims grew by $30 billion in Q4, closing at $4 trillion at end-2018.

Cross-border bank credit grew at a slow pace

Graph 1: Annual percentage change in banks' cross-border claims by counterparty country (interactive graph).
Source: BIS locational banking statistics (Table A1).

Global cross-border bank claims continued to expand at an annual pace of 1% (Graph 1, red line). They rose by $134 billion during Q4 2018, to stand at $29 trillion at the end of the year.

After a year of near zero growth, cross-border credit to advanced economy borrowers expanded by $76 billion in Q4 2018, which brought its year-on-year rate to 1% at end-2018. Claims on the United States expanded by $137 billion during the last quarter of 2018. By contrast, banks reported contractions in their claims on Germany (-$127 billion), Japan (-$71 billion) and the Netherlands (-$47 billion) during Q4 2018.

Cross-border claims on offshore centres as well as EMDEs expanded modestly (by $42 billion and $30 billion, respectively) in Q4 2018. The annual growth rates of claims on both regions slowed to 3%. 

Credit to non-bank financials continued to expand rapidly

Graph 2: Annual percentage change in banks' cross-border claims by counterparty sector (interactive graph).
Source: BIS locational banking statistics (Table A1).

Among individual sectors, growth rates in cross-border bank lending to banks and non-banks continued to diverge. Claims on banks (Graph 2, yellow line) contracted at an annual rate of 1% as of end-2018. By contrast, cross-border claims on non-banks grew at an annual rate of nearly 5% for the fourth consecutive quarter (blue line). The growth continued to be primarily driven by claims on NBFIs, which grew by 8% annually (red line).

The recent rapid growth of credit to NBFIs is an extension of the post-crisis trend. Cross-border claims on that sector grew at an average annual pace of 8% between end-2015 and end-2018. This is considerably higher than the respective average annual growth rates of cross-border credit to non-financial borrowers (+2%) and to banks (0%).

The bulk of cross-border credit to NBFIs is directed towards a small number of borrowing jurisdictions. At end-2018, just four of them accounted for nearly 80% of the $6 trillion outstanding stock of global cross-border claims on NBFIs. Nearly half of the global total consisted of positions vis-à-vis NBFIs located in the United States ($1.5 trillion, 24% of the total) and the euro area ($1.4 trillion, 23% of the total). The respective outstanding stocks of cross-border claims on NBFIs in the Cayman Islands ($1.1 trillion, 18% of the total) and the United Kingdom ($0.8 trillion, 14% of the total) were also substantial.

Cross-border lending to EMDEs slowed

Graph 3: Annual percentage change in banks' cross-border claims by counterparty country (interactive graph).
Source: BIS locational banking statistics (Table A1).

Claims on EMDEs rose by $30 billion in Q4 2018. Their annual growth, which has been positive since late 2016, slowed from 9% at end-2017 to 3% at end-2018 (Graph 3, red line). The bulk of this deceleration reflected a decrease in claims on developing Europe, while claims on Latin America started to revive.

Roughly half of the latest quarterly increase in lending to EMDEs went to borrowers in developing Asia and Pacific. Cross-border claims on the region rose by $15 billion during Q4 2018, which brought their annual growth rate to 5% at end-2018 (yellow line). Claims on China (+$9 billion), the Philippines (+$4 billion), Indonesia (+$3 billion) and Thailand (+$2 billion) all went up during Q4 2018. By contrast, cross-border lending to Chinese Taipei contracted by $11 billion.

The annual growth rate of cross-border lending to developing Africa and the Middle East remained strong, despite decelerating slightly to 8% at end-2018 from its recent high of 11% at mid-2018 (blue line). The largest increases in claims during Q4 2018 were reported vis-à-vis Qatar (+$7 billion), the United Arab Emirates (+$6 billion) and South Africa (+$5 billion).

The contraction in cross-border lending to Latin America and the Caribbean appears to have stopped. Cross-border claims expanded by $7 billion during Q4 2018, which brought their annual growth rate back into positive territory (1%), ending a three-year contraction (orange line). Claims on Brazil rose by $6 billion during Q4 2018, while those on Argentina declined by $2 billion.

Cross-border claims on developing Europe continued to contract, declining at an annual rate of 5% as of end-2018 (purple line). The $16 billion decline during Q4 2018 was primarily led by a $10 billion fall in claims on Turkey. Cross-border claims on Turkey decreased by 13% (on an exchange rate- and break-adjusted basis) during the second half of 2018.