S&P Does Not Expect A Recovery In The World's Banking Sector Until 2023
The global banking sector, including more than half of the G20 countries, is unlikely to recover to pre-crisis levels before 2023, according to a report published by the international rating Agency S&P Global Ratings.
"We do not expect the world's largest banking sectors, including more than half of the G20 countries, to return to pre-COVID-19 levels before 2023," it said.
S&P says it has taken 335 negative rating actions against banks around the world since the outbreak began and expects that financial institutions' sustainability ratings will find it difficult to return to pre-crisis levels.
The Agency points out that emerging market banks are likely to face a sharp increase in loan losses in 2020. At the same time, it's worth noting that there is potential for a gradual improvement in the situation in the following years, if economic activity recovers, as envisaged in the s&p baseline scenario. "The recovery of the Chinese banking system to pre-crisis levels may occur by the end of 2022. Other emerging markets may recover in 2023 or later," the Agency's experts believe.
As far as Europe is concerned, losses on loans from banks in the region are likely to rise significantly from historically low levels in 2020 and remain high in 2021. S&P adds that the Agency's baseline scenario assumes that a full economic recovery may take several years.