Banking recovery to pre-Covid levels may take years, says S&P

New Delhi: The path to recovery will be more painful for emerging markets such as India and the banks' recovery to long-term averages for key asset quality and profitability ratios will take years, S&P Global Ratings said.

India, Mexico, and South Africa are among the banking systems that will be slower to recover to 2019 levels-likely beyond 2023, according to S&P Global Ratings. Covid-19 and the oil price shock of 2020 are taking a heavy toll on global banks.

"S&P Global Ratings has taken 335 negative rating actions globally since the outbreak began, and we anticipate it will be difficult for the financial strength ratings on financial institutions to return to pre-crisis levels. We don't expect the world's largest banking sectors, including more than half of G20's, to recover to pre-Covid-19 levels until 2023, or beyond," the agency said.

The recovery for some other jurisdictions will likely be much further out. For India, Mexico and South Africa, a recovery to pre-Covid-19 levels may not arrive until after 2023.India, among these late-exiter banking jurisdictions are those jurisdictions where Covid-19 and other stresses have already had a meaningful negative effect.