More than four months into the coronavirus pandemic the economic costs so far have been huge, and there is no sign yet of the spread of the virus slowing. Executives in the banking world have warned that worse is yet to come, especially when stimulus measures are rolled back.
Jamie Dimon said of the crisis: “The word unprecedented is rarely used properly. This time, it’s being used properly. It’s unprecedented what’s going on around the world, and obviously Covid itself is a main attribute.”
The JPMorgan Chase CEO was speaking following the posting of his company’s second quarter earnings, and warned that the true impact of the pandemic hadn’t been seen due to stimulus measures.
“In a normal recession unemployment goes up, delinquencies go up, charge-offs go up, home prices go down; none of that’s true here,” he said. “Savings are up, incomes are up, home prices are up. So you will see the effect of this recession; you’re just not going to see it right away because of all the stimulus.”
And Dimon isn’t the only one warning of bad times to come. Piyush Gupta, group chief executive of Singaporean bank DBS, also warned that banks are likely to suffer further as a result of the pandemic.
Speaking to CNBC’s Managing Asia, Gupta expressed a concurring view that stimulus measures were helping to mask the true extent of the damage and that many companies would struggle when the measures ended.
With regards to his sector in particular, he said that banks could expect to experience the real fallout from the crisis towards the end of this year.
“I think you will see more stress on the financial system in the later part of this year and next year without a doubt. And that’s just because the fallout of the macroeconomic shock has still to filter through the financial system at this point in time, I think it will come” Gupta explained.