The past 18 months have been like none other within living memory. With large parts of the global economy shut down for months at a time, and the fortunes of many individuals and businesses taking a massive hit, the Covid-19 pandemic could have taken a very heavy toll on the global banking sector.
Yet in general — though pre-tax profits in most regions have dropped substantively and many banks are now carrying balance sheets laden with allowances for expected loan losses — the sector has held up remarkably well, especially compared to the financial crisis of 2007-09. In fact, far from being in dire straits, the sector is better capitalised than ever.
