ICC releases report affirming trade finances decade-long low-risk profile

Wednesday 12 June 2019 10:32 CET | News

The International Chamber of Commerce Banking Commission has released its 2018 Trade Register report highlighting the low risk nature of trade finance.

In 2018, global trade reached a new peak of USD 18.5 trillion, underpinning a trade finance revenue pool of USD 48 billion. ICC Trade Register data confirms default rates from 2008-2018 are low across all products and regions surveyed.

For the first time, payables finance and non-OECD Export Credit Agency-backed export finance products are included in the Trade Register. This year’s report captures a full decade of trade finance-related data – containing over USD 12 trillion of exposures from 24 million transactions across six products and 25 banks worldwide.

Results indicate that default rates from 2008-2018 are low across all products and regions, averaging 0.37% for Import Letters of Credit (L/Cs), 0.05% for Export L/Cs, 0.76% for Loans for Import/Export, and 0.47% for Performance Guarantees (when weighted by obligors). The results extend the decline in risk seen in 2016 into 2017, likely driven by strong GDP growth and the general de-risking approach taken by banks with regards to their balance sheets.

The report was conducted with the support from both Global Credit Data (GCD) and Boston Consulting Group (BCG). BCG, for its part, contributed a strategic perspective to the paper, including insights from their 2019 Trade Finance Model.

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Keywords: The International Chamber of Commerce Banking Commission, The International Chamber of Commerce, Trade Register, report, trade finance, letter of credit, global trade finance, Global Credit Data, GDP
Countries: World

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