ANALYZING THE PROFITABILITY OF TOP-RATED BANKS IN THE WORLD IN LIGHT OF COVID-19

Abstract

We analyze the impact of COVID-19 on the profitability of top-rated banks in the world using a comprehensive list of bank-specific ratios under post-lasso regressions based on GLS, FGLS and WLS techniques. While size and loans do not materially impound on profitability, a squeeze in the positive impact of asset utilization for all profitability metrics is conspicuously noted. COVID-19 induced declines in the negative impact of total impairment charges and provisions are noted for ROA and NIM while COVID-19-induced hike in the cost-to-income ratio is found for ROE. Findings also demonstrate that policy responses initiated during the crisis did not boost the profits of banks. From a policy perspective, sharing economy could manifest as a contemplated business model for banks, should the world relapse into another form of pandemic-related crisis.