Johannesburg – Finbond has warned that Covid-19 pandemic and national lockdown will result in a global economic downturn that could have an adverse impact on sales volumes and revenue – and potentially collection rates and asset valuations.
Finbond, one of South Africa’s leading mutual and savings bank, in its financial statements for the year ended February 29 said that the decrease in global economic activity and reduced trade brought on by measures to stem the spread of the pandemic would likely lead to higher unemployment, lower gross domestic product (GDP) numbers in the US, Canada and SA.
“This will be partly offset by the significant stimulus, support packages, and adjustments to fiscal and monetary policies that governments around the world have implemented in response to the crisis,” the group said.
The group expected the coronavirus pandemic would make an impact in the group’s profitability for the year ending February 28, 2021, as lockdown would likely prevent customers from spending on non-essentials.
“This will lead to lower sales credit extension and hence revenue. This will be accompanied by higher unemployment as businesses put measures in place to survive, as well as by actual business failures. This will in turn impact customer affordability, resulting in clients qualifying for small loans, or not qualifying at all,” said the group.