This year will be “a write-off” for Irish banks, with each of the main Irish financial institutions loss-making, according to a report from Davy Stockbrokers.
In addition, the size and timing of impairment changes experienced by the banks “remain highly uncertain,” as the impact of measures taken to limit the spread of Covid-19 hammers the economy.
The report out today sees Davy analysts lower their 2021 pre-provision estimates by 18pc for AIB, 32pc for Bank of Ireland and 52pc for Permanent TSB.
However, the banks are facing the pandemic from positions of capital, funding and liquidity strength, according to the report.
“Covid-19 presents indiscriminate threats and shrouds the outlook with uncertainty,” Stephen Lyons and Diarmaid Sheridan of Davy Stockbrokers, said.
“The phased re-opening of the economy is progressing successfully thus far but further supports, particularly for businesses, will be required to ensure losses are limited and the economy is rebooted from its period of hibernation,” they added.
Looking at mortgage markets, the report predicts a €10bn lowering of volumes over the next two years.
To-date income supports and banks’ engagement have contained household mortgage stress, the report said.