Global investment banks (GIBs) are likely to post modest profits in 2020 despite falling revenues and higher provisions due to Covid-19, according to Moody’s Investors Service.
"Despite the severe effects of the crisis assumed under our revenue shock scenario, the GIBs as a group would still record modest profitability for 2020 – allowing them to maintain solid capital buffers at or above the levels reported at the end of 2019," said Ana Arsov, managing director, financial institutions group at Moody’s.
"As a group, the GIBs have extensively rebuilt and extended their capital buffers following the 2007-08 financial crisis,” she added.
The coronavirus pandemic which has infected more than 2 million worldwide and killed over 137,000 people, has derailed the global economy and brought trade and the travel industry to a virtual standstill. The global economy is set to contract 3 per cent this year as it slides into the deepest recession since the Great Depression of 1930s, according to the International Monetary Fund. At least $17 trillion have been wiped off from stock markets globally.
Underpinning Moody's assessment is a review it did of the GIBs' potential revenue drop in their capital markets, investment banking, asset and wealth management businesses, as well as to a reduction in interest rates and substantially higher provisioning charges and marks in their leveraged loan pipelines.
The ratings agency said many of the GIBs have taken significant steps to maintain their capital positions in the early days of this coronavirus-created disruption.
"Since many of the banks have already meaningfully cut or cancelled their dividends and suspended their share repurchase programs in response to the coronavirus crisis and the regulators' requests, their capital ratios will additionally benefit from greater capital retention in 2020," Ms Arsov added.
Banks with a greater reliance on revenue from capital markets operations as well as asset and wealth management income streams face deeper revenue losses than more universally-oriented, diversified banks, according to Moody's.
Banks with the smallest proportional declines in profitability are generally European GIBs – such as Barclays, BNP Paribas, Credit Suisse and Société Générale – "in part because they begin from a lower starting point,” Moody’s said.
However, the ratings agency said the European banks' counterparts in the US such as Citigroup, Goldman Sachs and Morgan Stanley – "are likely to suffer a more substantial hit to profitability but begin from a higher starting point because of the strong results they posted in prior periods.”
The prevailing environment will be further exacerbated by low interest rates worldwide, which will affect the US GIBs the most, after the Federal Reserve lowered its key interest rate by 150 basis points in 2020 to date, much deeper in Europe, the ratings agency said.
Banks more exposed to unsecured consumer lending, including credit cards, could experience a more immediate sharp increase in loan losses, it added. .
"Under our scenario analysis, Citibank would be the most affected, projected loan losses would absorb almost 100 per cent of the group's 2019 pretax earnings," Moody's said.
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Film: In Syria
Dir: Philippe Van Leeuw
Starring: Hiam Abbass, Diamand Bo Abboud, Mohsen Abbas and Juliette Navis
Verdict: Four stars
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Killing of Qassem Suleimani
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
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Q&A with Dash Berlin
Welcome back. What was it like to return to RAK and to play for fans out here again?
It’s an amazing feeling to be back in the passionate UAE again. Seeing the fans having a great time that is what it’s all about.
You're currently touring the globe as part of your Legends of the Feels Tour. How important is it to you to include the Middle East in the schedule?
The tour is doing really well and is extensive and intensive at the same time travelling all over the globe. My Middle Eastern fans are very dear to me, it’s good to be back.
You mix tracks that people know and love, but you also have a visually impressive set too (graphics etc). Is that the secret recipe to Dash Berlin's live gigs?
People enjoying the combination of the music and visuals are the key factor in the success of the Legends Of The Feel tour 2018.
Have you had some time to explore Ras al Khaimah too? If so, what have you been up to?
Coming fresh out of Las Vegas where I continue my 7th annual year DJ residency at Marquee, I decided it was a perfect moment to catch some sun rays and enjoy the warm hospitality of Bab Al Bahr.
The Cairo Statement
1: Commit to countering all types of terrorism and extremism in all their manifestations
2: Denounce violence and the rhetoric of hatred
3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC
4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.
5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.
6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security
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Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Yemen's Bahais and the charges they often face
The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.
The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran.
Today, some 2,000 Baha'is reside in Yemen, according to Insaf.
"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said.
Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer.
The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy.
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