The Covid-19 pandemic has undoubtedly had a major impact on banks’ profitability this year, with only a minority of institutions appearing to be immune to its effects. One of the most obvious impacts is visible in the allowances for loan losses that many banks have had to set aside in anticipation of souring loans caused by the widespread and persistent economic disruption witnessed across the globe.
At an aggregate global level, an additional $352bn has been set aside in allowances for loan losses (held as contra assets on banks’ balance sheets), an increase of 26% compared to 2020.
