Retail banking in Japan: Coronavirus (COVID-19) Sector Impact

Retail banking in Japan: Coronavirus (COVID-19) Sector Impact

  • May 2020 •
  • 18 pages •
  • Report ID: 5908955 •
  • Format: PDF
Retail banking in Japan: 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 already significantly impacted the global economy, with key markets across the world losing 20-50% of their value for the year to date. Many economists and institutions have cut their forecasts, with consensus global GDP growth currently at 2.6% for 2020 and many experts predicting the potential onset of recessionary environments.

A similar trend is expected in Japan, as economic growth in the country is expected to have dipped in the first quarter of 2020 and will decelerate further if the disease is not controlled at the earliest possible opportunity. 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 the Japan.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
- COVID-19 is having a major impact on the Japanese economy, which will directly impact the country’s banking sector.
- Regional banks and the country’s “shinkin” financial co-operatives will face pressure to their earnings and asset quality as a result of uncertainty surrounding the severity and duration of the pandemic and the associated effects on these banks due to restrictions on economic activity.
- A drop in interest rates will weigh on banks’ net interest margins. Fee income will fall, driven by decreased retail spending, while non-performing loan ratios will increase - particularly across SMEs. However, support measures implemented by the government should alleviate some of the asset-quality pressure that will emerge from this downturn.
- This will work in the short term and hold down the impaired loan ratio for the first half of 2020, but pressure will be on lenders for many months to come.

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