There are many unanswered questions regarding the Covid-19 crisis, the first of which is the ultimate impact on human health
Yet, despite the many uncertainties that await us on any potential road to recovery and normality, two things are already apparent. Firstly, the crisis has thrown global markets into a volatile state, prompting companies to seek an optimal way to navigate their way through. Second, financial institutions must have clear strategies to maximize their resilience and prepare for any scenario which may occur.
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Undeniably, the global economy is facing a triple shock due to the alarming drop in market confidence and mounting disruption to supply and demand. Amid economic upheaval and falling oil prices, bank CEOs in the Middle East must use data effectively to make the correct decisions quickly. Doing so will unquestionably be the difference between institutions preserving their status and coming under ever-increasing pressure.
Problems, but not insurmountable
The latest estimates with a significant degree of approximation points towards key issues on financial institutions’ performance, where profitability may drop by 40-60 per cent, the cost-to-income ratio may increase by 15 per cent, margins may decrease by more than 20 per cent, and non-performing loans may surpass 10 per cent.
Middle East financial institutions have already faced similar challenges, with an additional range of operational issues in light of Covid-19 — such as how to operate branches remotely, how to serve trading floors, how to manage risks, how to optimize investment management in turbulent markets, and how to handle profitability hits.
The list is growing longer, emphasizing the enormity of the challenges
Specific clients have specific needs — new lines of credit in corporate banking to offset possible liquidity shortages and relocation of assets in wealth and asset management from investment accounts or deposits to fill business needs.
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