India’s Leading BFSI and FinTech Companies 2021

14 Global Banking: Overview The global economy logged its slowest growth in 2019, amid the global financial crisis and an escalating US-China trade war, uncertainty over Brexit and increased geo-political risks. Eventually, the outbreak of novel coronavirus in early-2020 cast its shadow on the global economic prospects. While the COVID-19 pandemic has led to unprecedented challenges for the global economy, the fear of subsequent waves and newer strains of the virus now loom large, posing a bigger threat to growth, investment and trade. According to the International Monetary Fund (IMF) the outlook remains extremely uncertain, although recent vaccine approvals have raised hopes of a turnaround in the pandemic. Considering the possibility of subsequent waves and long-term disruptions in the global value chains, the IMF in January 2021 projected growth of 5.5% in 2021 and 4.2% in 2022 in the global economy. The global financial system initially showed signs of resilience through 2019, led by banks, on the back of financial regulatory reforms, with bank credit to the non-financial sector improving in Q2 of 2019. As the pandemic unfolded, higher capital and liquidity ratios as well as prompt policy actions helped the global banking system endure its initial impact. However, as the pandemic eventually gathered steam, bank credit growth met with abrupt interruption in Q1-FY20, especially in the emerging markets. Bank credit eventually gathered momentum over the second quarter amidst a spate of policy responses by Governments aimed at easing financial conditions. Total global financial assets and banks’ financial assets grew by 6.6% and 5.1%, respectively, during the year. Global Banking: Performance Owing to the regulatory reforms progressively implemented over the past decade up to 2019, the global banking system was on strong footing when the COVID-19 pandemic hit and sustained credit supply to the real sector. Credit to non-financial sectors 22000 24000 26000 28000 30000 32000 34000 36000 2015 2016 2017 2018 2019 Bank credit to non-financial sectors (Emergi ng economies) 32500 33000 33500 34000 34500 35000 35500 36000 36500 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Bank credit to non-financial sectors (Emergi ng economies) Source: IMF, RBI Before the pandemic hit, amid a global slowdown, bank credit growth to the private non-financial sector moderated across most Advanced Economies (AEs) and Emerging Market Economies (EMEs) through 2018, followed by uneven recovery Banking Dun & Bradstreet