Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with key markets across the world losing 20-50% of their value for the year-to-date. Many economists and institutions have cut their forecasts, with consensus global GDP growth currently at 2.6% for 2020, and many experts predicting the potential onset of recessionary environments.

The US’s GDP is anticipated to decline in 2020 due to the economic disruption caused by the outbreak of the virus. The US has been the worst hit country so far with over 2.4 million confirmed cases reported as of June 26, 2020, while the death toll has risen to 124,415 - much higher compared to any other nation in the world. While the government is easing restrictions a resurgence of new cases across several states could lead to a second wave, forcing the re-emergence of lockdown measures (either voluntary or imposed).

This report focuses on the impact of the Coronavirus outbreak on the economy and the retail banking industry in the US. Based on our proprietary datasets, the snap shot provides a detailed comparison between pre-COVID-19 forecasts and revised forecasts of total mortgage, consumer, credit card loan balances as well as deposit balances in terms of value and growth rates. It also offers information on measures taken by the government to combat Coronavirus.

Scope

- As the economic recession brought about by the lockdown measures starts to bite, US banks could see a near-term downside to profitability. Net interest margins will remain low and could be compressed further by rate changes.
- Fee income is falling, driven by decreased retail spending, while non-performing loan ratios will increase - particularly for SMEs. To address this issue and protect both consumers’ and lenders’ interests, on March 13 the US government decided to waive all federal student loan interest until further notice. Moreover, credit provisioning driven by economic expectations under the current expected credit losses standard could rise, leading to further pressure on bank profits.
- Government support, particularly low-cost funding, will help but ultimately can only mitigate the impact. For banks, the severity of losses will depend on whether lockdown restrictions on individuals and businesses can be lifted without a resurgence in cases, or whether businesses will be forced to declare bankruptcy and borrowers will default on their loans.

Reasons to Buy

- Make strategic decisions using top-level revised forecast data on the US retail lending and deposit industry.
- Understand the key market trends, challenges, and opportunities in the US retail lending and deposit industry.
- Receive a comprehensive insight into the total consumer loans in the US, including mortgages, personal and credit card loans as well as retail deposits balances.