Retail Banking in Germany: Coronavirus (COVID-19) Sector Impact

Retail Banking in Germany: 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 significantly impacted the global economy, with key stock markets across the world losing 20-50% of their value for the year to date. Many economists and institutions have cut their forecasts, with many experts predicting the potential onset of recessionary environments.

A similar trend is expected in Germany, with its economic growth expected to have dipped in the first quarter of 2020. The real GDP growth rate for Germany is expected to enter negative growth this year, meaning one of the largest economies in the eurozone is almost certainly already in recession. The decline will have an adverse impact on all sectors, including banking.

This report focuses on the impact of the Coronavirus outbreak on the economy and the retail banking industry in Germany. 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 incited by the COVID-19 outbreak starts to impact the economy, German 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 will fall, driven by decreased retail spending, while non-performing loan ratios will increase - particularly across SMEs.
- The German government has announced various tax measures, such as the deferral of tax payments and a reduction of prepayments. It has also suspended insolvency filing obligations until the end of September 2020 to protect companies. These measures will support the banking sector in the short term, but there will be pressure on lenders for many months following.

Reasons to Buy

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