Strategy Note /
Global

Inflation, interest rates and the margin-cost trade-off for EM banks

  • Most EM bank margins benefit from tighter monetary policy, with a median 15bps boost for each 100bps interest rate rise

  • But the underlying driver is higher inflation; each 1% increase in operating costs knocks 1% off median EM bank profits

  • GCC banks are well-positioned (not least given high oil prices). Banks in India, Colombia and Hungary are poorly placed

Inflation, interest rates and the margin-cost trade-off for EM banks
Rahul Shah
Rahul Shah

Head of Corporate & Thematic Research

Contributors
Rabail Adwani
Rohit Kumar
Tellimer Research
29 June 2022
Published byTellimer Research

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