Retail Banking in Canada - Coronavirus (COVID-19) Sector Impact

Retail Banking in Canada - Coronavirus (COVID-19) Sector Impact

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 most countries around the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.

A similar trend was seen in Canada, with economic growth declining in the first quarter of 2020. With the government now easing lockdown restrictions, and several provinces allowing businesses to reopen, a rise in consumer and commercial spending is expected, which in turn will support the banking industry.

This report focuses on the impact of the Coronavirus outbreak on the economy and the retail banking industry in Canada. 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

- Like most countries across the world, Canada is on track for a recession as COVID-19 is having a major impact on the local and global economy.
- Canadian banks are experiencing a near-term downside to profitability. Net interest margins remain low and could be compressed further by rate changes.
- Fee income is falling, driven by decreased retail spending and non-performing loan ratios increasing, particularly among SMEs. However, the central bank’s announcement of an automatic six-month loan payment deferral for existing loans (including mortgages) will relieve some of the burden from SMEs and individuals affected by the COVID-19 outbreak.
- These measures will also help mitigate the negative impact of defaults in the short term. Overall, the pandemic will be a tough but temporary blow to Canada’s banking sector.

Reasons to Buy

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