U.S. Banking Outlook 1Q21: Fair winds from pandemic control and policy support

Summary

After the roller-coaster of last year, banking aggregates will normalize in 2021. Virus control will gain traction, highly impacted sectors will gradually reopen, and the overall economic recovery will solidify with the support of policymakers. These conditions will be highly favorable for the banking industry.

Key points

• Key points:
• Economic conditions will support easing of credit standards and strong loan origination
• Deposit growth will remain solid throughout 2021 as the Fed continues purchasing assets and the economy expands further
• Credit quality will remain satisfactory and profitability will be favorable
• The transition from the physical to the digital service delivery channel has intensified

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