1、A test of resilience: Banking through the crisis, and beyond December 2020 McKinsey Global Banking Annual Review 2020 2A test of resilience: Banking through the crisis, and beyond Content 05 Introduction 11 A long winter 27 Strengthening the foundation 37 How banks can thrive 53 Contact 3A test of r

2、esilience: Banking through the crisis, and beyond “Our latest research indicates that, in almost all COVID-19 scenarios, the vast majority of banks should survive. Further, we expect that most institutions can regain their 2019 ROE within five years, provided they are willing to do the hard work nec

3、essary on productivity and capital management”. 4A test of resilience: Banking through the crisis, and beyond Ten months into the COVID-19 crisis, the world has learned a great deal about the disease and the novel coronavirus that causes it. But the knowledge has come at an extraordinary cost: more

4、than 67 million cases worldwide and 1.5 million lives lost. We have also learned more about how to control the disease.1 But that knowledge too has been hard-won: tens of millions are out of work, a global recession has descended, and trillions in global GDP have already vanished. These extraordinar

5、y sacrifices may be starting to pay off. Hopes are growing for COVID-19 vaccines. New therapeutics are also showing promising results. Manufacturing and distributing these products worldwide will be a significant challenge, but there is no mistaking the change in sentiment. People are daring to hope

6、 for an end to the pandemic. Almost certainly, however, victory still lies some nine to twelve months in the future.2 Meantime, second and third waves of infection have arrived in the Northern Hemisphere, and as people crowd indoors in the cold weather ahead, the infection rate may get worse. As a r

7、esult, the potential for near-term economic recovery is uncertain. The question of 1 Sarun Charumilind, Matt Craven, Jessica Lamb, and Matt Wilson, “Preventing future waves of COVID-19: Briefing Note #21,” August 2020, McK. 2 Sarun Charumilind, Matt Craven, Jessica Lamb, Adam Sabow, and Matt Wilson,

8、 “When will the COVID-19 pandemic end?,” November 2020, McK. the day is, When will the economy return to its 2019 level and trajectory of growth? This report will provide a range of possible answers for the global banking industrysome of which are perhaps surprisingly hopeful. Unlike many past shock

9、s, COVID-19 is not a banking crisis; it is a crisis of the real economy. Banks will surely be affected as credit losses cascade through the economy and demand drops. But the problems are not self-made. Global banking entered the crisis well capitalized and is far more resilient than it was 12 years

10、ago. Our latest research indicates that, in almost all COVID-19 scenarios, the vast majority of banks should survive. Further, we expect that most institutions can regain their 2019 ROE within five years, provided they are willing to do the hard work necessary on productivity and capital management.

11、 The farsighted among them will do even better. Such banks can capitalize on some deep- seated and accelerating trends to rethink their organization, business model, and reason for being and to set themselves up for long-term success. When will the economy return to its 2019 level and trajectory of

12、growth? 5A test of resilience: Banking through the crisis, and beyond Introduction A deep freeze and gradual thaw As days have shortened in the Northern Hemisphere, banks have been preparing. In the first half of 2020, loan-loss provisions exceeded those in all of 2019. Banks have not yet had to tak

13、e substantial write-offs; their forbearance programs and significant government support have kept households and companies afloat. But few expect this state of suspended animation to last. The stock market appears to reflect this: industry market cap has declined by about 17 percent in the first nin

14、e months of the pandemic, even as broader markets have risen. We anticipate that, in months and years to come, the pandemic will present a two-stage problem for banks. First will come severe credit losses, likely through late 2021; almost all banks and banking systems are expected to survive. Then,

15、amid a muted global recovery, banks will face a profound challenge to ongoing operations that may persist beyond 2024. Depending on scenario, from $1.5 trillion to $4.7 trillion in cumulative revenue could be lost between 2020 and 2024. In our base-case scenario, $3.7 trillion of revenue will be for

16、gonethe equivalent of more than a half year of industry revenues that will never come back. In that same scenario, return on equity would continue its decline, from 8.9 percent in 2019 to 5.4 percent in 2020 to 1.5 percent in 2021. At the trough in 2021, ROE would fall to 1.1 percent in North Americ

17、a, 1.8 percent in Europe, and 0.2 percent in developed Asia. ROE would fall from higher starting levels and bottom out higher in emerging Asia (2.5 percent), the Middle East and Africa (MEA; 3.7 percent), and Latin America (5.2 percent); and it would take a smaller dip to 8.6 percent in China. Note:

18、 Dataset includes about 1,640 banks and 3,820 companies from other industries. Source: SNL Financial 0 20 40 60 80 100 20002010Q3 2020 0 0.4 0.8 1.2 1.6 2.0 20002010Q3 2020 All industries excluding banking Banking Recession Exhibit 1 The banking industry trades at a 50% discount to the broader econo

19、my; more than three- quarters of banks trade below book value. Price-to-book 200020Banks trading above book value, % In the first half of 2020, global loan-loss provisions exceeded those in all of 2019. 6A test of resilience: Banking through the crisis, and beyond Those effects will be felt keenly b

20、y an industry that was already stressed. In last years edition of this report, we highlighted that nearly 60 percent of banks did not return their cost of capital. By fall 2020, things were worse: the industry was trading at a 50 percent discount to the broader market, a historical low, with 79 perc

21、ent of banks trading below book value. (Exhibit 1). This is felt differently across regions: North American banks price-to-book ratio at midyear was more than 30 points higher than that of European banks and 15 points above that of Asian banks. These regional differences reflect changes over the pas

22、t 20 years. In 2000, the roster of the worlds 30 most valuable banks included eight American, 14 European, and just 4 Asian institutions. By November 2020, only 4 European banks remained on the list, which now features 15 Asian and 10 North American banks. Staying warm People in northern climates kn

23、ow that winter tests our endurance, skills, and patience. Banks will be similarly stretched. Some will need to rebuild capital to fortify themselves for the next crisis, in a far more challenging environment than the decade just past. Zero percent interest rates are here to stay and will reduce net

24、interest margins, pushing incumbents to rethink their risk- intermediation-based business models. The trade-off between rebuilding capital and paying dividends will be stark, and deteriorating ratings of borrowers will lead to inflation of risk-weighted assets, which will tighten the squeeze. As thi

25、s report lays out in detail, solutions are available to each of these problems. Banks responded extraordinarily well to the first phases of the crisis, keeping workers and customers safe and keeping the financial system operating well. Now they need equal determination to deal with what comes next b

26、y preserving capital and rebuilding profits. We see opportunities on both the numerator and denominator of ROE: banks can use new ideas to improve productivity significantly and can simultaneously improve capital accuracy. Those steps should see them through the immediate challenges but will not set

27、 them up for long-term success. To get there, banks need to reset their agenda in ways that few expected nine months ago. We see three imperatives that will position banks well against the trends now taking shape. They must embed newfound speed and agility, identifying $3.7 trillion of revenue will

28、be forgone, in our base-case scenario Banks can preserve capital, rebuild their profits, and position themselves for the strategic shifts now underway. 7A test of resilience: Banking through the crisis, and beyond the best parts of their response to the crisis and finding ways to preserve them. They

29、 must fundamentally reinvent their business model to sustain a long winter of zero percent interest rates and economic challenges, while also adopting the best new ideas from digital challengers. And they must bring purpose to the fore, especially environmental, social, and governance (ESG) issues,

30、and collaborate with the communities they serve to recast their contract with society. About this report This is the tenth edition of McKinseys Global Banking Annual Review and is based on insights and expertise from McKinseys Global Banking Practice. It is structured in three chapters. In the first

31、, we review banks pre-COVID-19 context, examine the effects of the crisis to date, and estimate the effects still to come. In the second, we outline the short-term actions needed to adapt. In the third, we trace the trends accelerated by the pandemic and detail the three imperatives banks will need

32、to pursue if they are to thrive in coming years. 8A test of resilience: Banking through the crisis, and beyond Banks can use new ideas to improve productivity and capital accuracy simultaneously. 9A test of resilience: Banking through the crisis, and beyond “The crisis will play out in two stages. F

33、or most banks, the chief concern through 2021 will be credit losses of a magnitude not seen in decades.” 10A test of resilience: Banking through the crisis, and beyond The COVID-19 pandemic slammed shut a decade-long window of opportunity for banks. Banks had spent the time building capital reserves

34、a regulatory requirement whose importance is evident in light of the current crisis. However, most industry incumbents did not use the boom to prepare their businesses fully for what is shaping up as a significant bust. Building capital stocks inevitably lowered ROEs, and in many cases, banks did no

35、t adapt their business models enough to generate sustainable positive returns. Whats more, few are prepared for zero percent interest rates. Margins and revenues are set to shrink further. The crisis will play out in two stages. For most banks, the chief concern through 2021 will be credit losses of

36、 a magnitude not seen in decades. In 202224 and possibly beyond, decreased demand and anemic net interest margins, depressed by a prolonged zero-rate environment, will surpass risk cost as the industrys primary ailments. In this chapter, we outline scenarios for the pandemic and economy, estimate th

37、e effects on ROE, and describe how we expect the next four years will play out for the industry. Scenarios for the pandemic and the economy Each month since April 2020, McKinsey has surveyed more than 2,000 global executives across industries on the likely path of the pandemic and the economic recov

38、ery.3 We asked them 3 “Nine scenarios for the COVID-19 economy,” October 2020, McK. A long winter 11A test of resilience: Banking through the crisis, and beyond to take a view on two critical dimensions that will shape the evolution of the crisis: the potential for rapid and effective control of the

39、 virus and the effectiveness of government policy interventions. The three alternatives along each dimension yield nine scenarios, four of which are more positive (the “A” scenarios), and five more negative (the “B” scenarios). In the past three months, the outlook has been steady. Business leaders

40、see a diminishing potential for rapid and effective control of the virus, and they are only moderately optimistic about the effectiveness of government policy interventions. Exhibit of Source: McKinsey analysis, in partnership with Oxford Economics Virus spread and public- health response Efectivene

41、ss of the public- health response Knock-on efects and economic-policy response Efectiveness of government economic policy BETTER BETTERWORSE WORSE Contained health impact; sector damage and lower long-term growth Contained health impact; strong growth rebound and recovery Contained health impact; ra

42、pid and strong growth rebound and recovery Recurring health impact; slower near-term growth and time to recovery Recurring health impact; strong growth rebound and recovery Sept 2020 Dec 2022 Recurring health impact; slow long-term growth insufcient to deliver full recovery High levels of health imp

43、act; prolonged down- turn without foreseeable recovery High levels of health impact; slower near-term growth and delayed recovery High levels of health impact; delayed but strong growth rebound and recovery B1A4 A2 B5 A3 A1B2 B4B3 MutedStalled Faster Exhibit 2 Executives continue to favor A1 as the

44、likeliest global COVID-19 scenario; some see A3 and B2 as more likely. Most likely scenarios for COVID-19s impact on global GDP 12A test of resilience: Banking through the crisis, and beyond Most executives anticipate a muted recovery (our scenario A1) (Exhibit 2). Many also expect scenario B2, in w

45、hich recovery stalls; scenario B1, in which economic interventions are ineffective, is also on the minds of executives. A smaller segment anticipates a faster recovery like that shown in scenario A3. On balance, a narrow majority (55 percent of respondents in our October survey) foresee an epidemiol

46、ogical and economic resolution to the pandemic in 2021. Nearly half expect the crisis to resolve in one of the pessimistic B scenarios. Regionally, respondents in AsiaPacific, India, Latin America, North America, and developing markets expect that economic conditions in their country will improve in

47、 six months. Two exceptions to the trend are Greater China (Mainland China, Hong Kong, and Taiwan), where expectations have been high for months but dipped slightly in October, and Europe, the only region in which respondents on average expect their countries economic conditions to decline rather th

48、an to improve. In this report, we use the muted recovery (A1) as the base case for our projections and the stalled recovery (B2) as the proxy for the range of more challenging scenarios. We also include a view of the faster-recovery scenario (A3), which might be observed in regions with continued so

49、lid public- health responses. While A1 is our global base case, its of course possible that countries may experience more positive (or negative) scenarios in the coming months and years. The pandemics two-stage impact on global banking The final tally of economic damage from this crisis wont be known for some time. What we do know is that the crisis will take a few years to resolve for banks and is likely to play out in two distinct stages. A few challenging years Banks returns have trended sideways for a long time. By our calculations, 63 percent of banks did