Fun

IMF Predicts Banks Will Struggle at Least 5 More Years After Global Economy Recovers

News Feed - 2020-05-27 05:05:25

IMF Predicts Banks Will Struggle at Least 5 More Years After Global Economy Recovers


The International Monetary Fund (IMF) has predicted that banks will struggle to generate profits at least five years after the global economy recovers from the coronavirus-led economic crisis. The IMF explained that banks were struggling even before the covid-19 pandemic so their troubles “will extend to at least 2025, well beyond the immediate effects of the current situation.”Banks to Face at Least 5 More Years of Hardship


The IMF expects that banks will continue to struggle to generate earnings after the global economy recovers from the economic crisis. In its most recent “Global Financial Stability Report,” the IMF examined banks across nine advanced economies and found that they will struggle to generate profits over the next five years as the coronavirus pandemic causes a sustained period of low interest rates. The IMF described:Banks’ earnings challenges emerged prior to the recent covid-19 episode and will extend to at least 2025, well beyond the immediate effects of the current situation.


“The covid-19 outbreak is an additional test to banks’ resilience,” the IMF elaborated. “Underlying profitability pressures are likely to persist over the medium- and longer-term even once the global economy begins to recover from the current shock.”


Banks’ earnings have already been severely hit by the economic shock of the coronavirus pandemic, with several of the largest U.S. banks reporting massive losses in Q1 2020. The KBW Nasdaq Bank Index, a benchmark stock index of the U.S. banking sector, has fallen 39% year to date. Wells Fargo’s first-quarter earnings fell 90% while JPMorgan Chase’s profit dropped 70%. Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley also saw their profits plunge. However, Oppenheimer analyst Chris Kotowski pointed out that banks have not taken substantial credit losses so their large provisions for loan losses in the first quarter lack “economic substance.” Significant loan losses are expected in the second quarter.




IMF financial counselor Tobias Adrian pointed out that “Banks go into this crisis with a lot of capital and liquidity.” Nonetheless, he added:This is a very, very severe economic crisis.


The European Banking Authority (EBA), however, said Monday that it expects banks in Europe to be able to withstand the potential credit risk losses from the economic crisis. The EBA noted that “the extent to which banks will be affected by the crisis is expected to differ widely, depending on how the crisis evolves, the starting capital level of each bank and the magnitude of their exposures to the most affected sectors.”


Meanwhile, IMF Managing Director Kristalina Georgieva told a meeting of G20 finance ministers and central bank chiefs last month that more than 100 countries have asked for emergency assistance so far. The IMF has declared a global recession, predicting the worst global crisis since the Great Depression with a cumulative loss estimate to global GDP of around $9 trillion.


What do you think about the IMF’s prediction? Let us know in the comments section below.Goldman Sachs Hosting Bitcoin Call as Institutional Interest in Cryptocurrency SurgesNEWS | 22 hours agoOver a Hundred 10-Year-Old Bitcoin Addresses Signed: Message Calls "Craig Wright a Fraud" NEWS | 1 day agoTags in this storycoronavirus crisis, Great Depression, imf assistance, imf bailout, imf banks, imf crisis, imf grant, imf prediction, imf recession, Recession


Image Credits: Shutterstock, Pixabay, Wiki CommonsUse Bitcoin and Bitcoin Cash to play online casino games here.Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.Read disclaimer Show comments

News Feed

Bitcoin Sharp Rebound Above $95K: Stop Hunting or Trend Reversal?
Este artículo también está disponible en español. Bitcoin (BTC) witnessed a sharp decline below $90,000 yesterday, sparking concerns about its near-term stability. Howeve
Prashant Jha3 hours agoAnother week of DeFi hacks, but ZK-proof development heats up: Finance RedefinedThe total value locked in DeFi protocols remained below $50 billion after another week of exploits.683 Total views3 T
Report: UK Gold Dealer Sold Out of Bullion After Pound’s Record Fall Causes Demand to Skyrocket
Report: UK Gold Dealer Sold Out of Bullion After Pound"s Record Fall Causes Demand to Skyrocket The United Kingdom-based gold dealer, Ash Kundra, has claimed that he recently ran o
Retail Giant Newegg Unveils Shiba Inu Support on Massive Billboard: SHIB to Be Accepted for Payments in December
Retail Giant Newegg Unveils Shiba Inu Support on Massive Billboard: SHIB to Be Accepted for Payments in December A leading tech-focused retailer, Newegg, has announced its support
Ana Paula Pereira3 hours agoVC Roundup: private accounts, tokenization, and healthcare infrastructure grab investors’ attentionNocturne, Untangled Finance, Account Labs, Rymedi, and Waterfall network secure venture cap
Dogecoin Price Completes First Bull Phase Similar To 2021, Here’s What Comes Next
Este artículo también está disponible en español. Crypto analyst KrissPaxhas revealed that the Dogecoin price has completed the first part of its bull phase, similar to w
Coinbase Obtains Regulatory Approval to Provide Crypto Services in Italy
Coinbase Obtains Regulatory Approval to Provide Crypto Services in Italy Nasdaq-listed cryptocurrency exchange Coinbase has obtained regulatory approval to offer crypto services in
Analyst: ‘Bitcoin Correction Very Similar to 2013 — BTC May Remain Stuck at $30K for a While’
Analyst: "Bitcoin Correction Very Similar to 2013 — BTC May Remain Stuck at $30K for a While" The analytics provider Ecoinometrics has published a tweetstorm t
Bitcoin Long-Term Holders Are Buying Again — Can They Push BTC Price Higher?
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Zhiyuan Sun12 hours agoHTX’s Justin Sun claims record profits despite staff cutsThe blockchain personality claims that his exchange recorded a profit of $98 million in Q3 2023.1476 Total views16 Total sharesListen to a
Production of $2.7 Million-per-Episode: South Korean Crypto-Related TV Drama Series Is Set to Start in 2021
Production of $2.7 Million-per-Episode: South Korean Crypto-Related TV Drama Series Is Set to Start in 2021 A major South Korean TV series with crypto and blockc
Bitcoin, Ethereum Technical Analysis: BTC, ETH Consolidate as June Kicks Off
Bitcoin, Ethereum Technical Analysis: BTC, ETH Consolidate as June Kicks Off Following yesterday’s gains, both bitcoin and ethereum consolidated on Wednesday, as bullish mom