COVID-19 impact on Saudi Arabian banks might last up to nine months – KPMG study

Tuesday 28 April 2020 13:29 CET | News

A report released by KPMG Saudi Arabia has revealed the impact COVID-19 has on the banking sector and the potential countermeasures to cope with the new normal.

The study shows that the impact of the virus outbreak on overall business is at medium to high levels and could last for three to nine months. The most impacted segment is SME financing, followed by certain products in consumer finance.

On the retail banking side, the survey revealed that the closure of travel, hospitality and leisure activities impacted credit card utilisation. At the same time, volatility in interest rates, deterioration in real estate prices, and uncertainties concerning lockdown duration and resulting unemployment led to a slowdown in mortgage financing.

According to the KPMG report, the main challenges for the banking sector are credit portfolio deterioration, capital impacts, liquidity repercussions, cyber risk, contingency plan activation and continuation of banking services.

Since banks play an important role in implementing the Saudi Arabian Monetary Authority’s (SAMA) and government’s stimulus packages, KPMG presented a six-step action plan for these financial institutions which includes identifying potential risky counterparties, making adjustments to provisions coverage, updating liquidity plans, managing recoveries plans, protecting the bank and clients from cyber-attacks, and following a clear communication plan with all stakeholders.

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Keywords: bank, digital transformation, COVID-19, coronavirus, KPMG, report, banking, SMEs, retail banking, credit card, mortgage, liquidity, cyber risk, SAMA
Categories: Banking & Fintech
Countries: Saudi Arabia
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Banking & Fintech

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