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12 Apr, 2021 Author Vanya DamyanovaRehan Ahmad
Loan loss provisions at major European banks should record a moderate decline in 2021 after peaking in the immediate aftermath of the COVID-19 outbreak in 2020, but are not likely to drop below pre-pandemic levels before 2022, credit rating analysts said.
A key factor affecting provision levels as economies recover will be the withdrawal of government and bank support schemes that bridged the short-term liquidity of pandemic-impacted borrowers, according to analysts at S&P Global Ratings, Fitch Ratings and DBRS Morningstar. As the schemes are wound down, credit loss provision levels may fluctuate as banks cope with an increase in bad loans.