The emerging market banks most vulnerable to rising cost inflation

  • For the largest EM banks, a 10% increase in costs reduces profit by 10% (assuming no change in revenues or provisions)

  • Profit gearing to cost inflation is greatest for South Africa, Philippines, India banks. MENA banks are less sensitive

  • Bank valuations in MENA, South Africa appear most at risk. Colombia, Peru banks are overly discounting inflationary pain

June 3rd, 2022
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