IMF Predicts Banks Will Suffer Losses Over the Next 5 Years

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In Brief
  • The IMF has warned that banking profits will likely decline through 2025.

  • U.S. banking stocks have tanked in 2020.

  • Bitcoin's positive price performance offers an alternative to the struggling mainstream market.

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The current struggles in the banking sector may last until 2025 according to the International Monetary Fund (IMF).



According to an IMF report published on Friday, banks could continue to see red through 2025. The document, which is a follow-up to April’s ‘Global Financial Stability Report,’ says the economic downturn occasioned by the coronavirus pandemic exacerbated weaknesses in the finance sector.

As part of the report, the IMF argued that banks’ revenues were already in decline even before the onset of COVID-19. An excerpt from the document reads:



Beyond the immediate challenges associated with the COVID-19 outbreak, a persistent period of low interest rates is likely to put further pressure on bank profitability in the coming years. Even once the global economy begins to recover from the current shock.

As previously reported by BeInCrypto, U.S. banking stocks are firmly in the red with many experiencing declines since the start of the year. Meanwhile, Bitcoin (BTC) is leaving these poorly performing banking stocks in the dust. The largest crypto by market capitalization is outperforming JPMorgan by about 300% year-to-date (YTD).

Indeed, JPMorgan’s Q1 profits for 2020 plummeted 69% when compared with earning calls for Q1 2019. Such is the revenue hemorrhage in the banking sector that Warren Buffett has been massively unloading Berkshire Hathaway’s stake in major U.S. banks.

Further profitability declines in the banking sector may work in Bitcoin’s favor. BTC is already showing a clear decoupling from the U.S. stock market. Further declines in the banking industry could see more investments flowing into Bitcoin, solidifying the BTC safe-haven asset narrative.

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Osato is a reporter at BeInCrypto and Bitcoin believer based in Lagos, Nigeria. When not immersed in the daily happenings in the crypto scene, he can be found watching historical documentaries or trying to beat his Scrabble high score.

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