Goldman: Bank profits smashed as bad debts pile up

Yesterday was another bloodbath for banks on the ASX, with the ASX 200 Financials index plunging another 9.3% to be down 44% since the 21 February peak:

According to Goldman Sachs, the domestic economy will contract by 6% in 2020, and that this will see the banks’ bad debts increase to 50 basis points of loans and reduce the sector’s earnings by 20%:

Goldman Sachs said it was now forecasting a 6 per cent contraction in the domestic economy in 2020 — the biggest since the 1920s Great Depression — with unemployment peaking at 8.5 per cent.