The IMF’s October 2021 report predicts that the global economy will grow 5.9% in 2021 and 4.9% in 2022. Advanced economic growth is projected to be 5.2% in 2021 and 4.5% in 2022. Growth in emerging markets and developing countries is projected to be 6.4. % In 2021, 5.1% in 2022. Headline inflation is rising rapidly in the United States, some emerging markets and developing countries. Trade volumes are expected to increase by almost 10% in 2021 and settle to about 7% in 2022. Concerns about the Omicron variant will continue to prevail in 2022, affecting many of Globe and GCC’s economies in the same way. The Federal Reserve has signaled three rate hikes in 2022 to combat inflation. During the Covid-19 shock, banks have benefited from public and indirect support through various fiscal and monetary policy measures.
The balance sheets of banks around the world are in good shape, with capital strengthened, profitability and asset quality in Covid-19. Key risks to the global banking sector in 2022 include economic recovery from Covid-19, volatile financial markets, debt leverage and a banking business model that challenges fintech. In some economies, a surge in inflation has begun a monetary tightening cycle. Inflation can help NIM. Economic recovery will support credit demand, interest rates are expected to rise slightly as inflationary pressures rise, and integration will reduce overcapacity and improve efficiency. On the technology side, more investment is needed to meet changing customer preferences and increase efficiency. Thrust is given to work from home, big data, and artificial intelligence. The digital ecosystem is expected to continue. Banking ESG frameworks enable integration into business strategy and risk management. It provides growth opportunities and acts as a catalyst. The rise of cryptocurrencies has put the spotlight on blockchain solutions and accelerated discussions on central bank digital currencies. Technology should be an enabler, not a medium of exchange. If the cryptocurrency is measured and managed within the framework, it is acceptable. Regulatory technologies have emerged to comply with financial services regulations. You can streamline compliance and gain a competitive advantage.
The global banking sector has responded quickly to blockades by enhancing digital products and services. The transition to a cashless economy is accelerating significantly as the use of cards and mobile payments increases. The retail banking and payments segment has been in turmoil for years, and the corporate and investment banking and wealth management segments will increasingly see similar trends in digital services in 2022. Digital solutions and market infrastructure will be much more diverse, but personal relationships will continue to play a role.
The outlook for GCC Bank is stable over the next 12-18 months as the coronavirus continues to recover from the pandemic against the backdrop of soaring oil prices. Large-scale infrastructure projects and regulatory measures will also support GCC Bank’s credit growth in 2022. Banks’ independent credit profile remains strong, supported by high capital buffers, solid profitability, and improved economic conditions.
Non-performing loans increase slightly as the loan expires, but the quality of the assets remains sound overall. The completion of large-scale infrastructure projects such as the FIFA World Cup stadium in Qatar in 2022 and the Giga Project in Saudi Arabia as part of the Vision 2030 program will increase credit demand in 2022.
Activities that contribute to Expo 2020 and the FIFA World Cup Qatar 2022 will also support the 2022 economic and banking sector. Qatar’s Fiscal Policy 2022 focuses on health, education and infrastructure. Qatar’s banking sector witnessed nearly 8.5% lending growth in the first 11 months of 2021. Contracts, services, and transactions are the main contributors. Deposit growth is also expected to improve next year, and sufficient liquidity in the banking system provides a shield against unexpected shocks. In the first quarter of 2022, banks will need to continue to pay attention to the economic impact of Omicron and other Covid variants. Banks’ business models have been influenced by Covid variants since March 2020. They have been reorganized to address the challenges that arise from Covid variants. Overall, banking has been redefined for Covid variants.
* Dr. R Seetharaman is Group CEO of Doha Bank.
http://www.gulf-times.com/story/707177/Banking-is-getting-redefined-on-account-of-Covid-v Banking is redefined for Covid variants