IMPACT OF COVID-19 CRISIS ON BANK PERFORMANCE: A Comparative Study of Zimbabwe and South Africa

The study examined the impact of the Covid-19 crisis on bank performance, focusing on banks’ financial stability and stock market performance. A quantitative research approach was implemented based on banks internal stability indicators, and regression of bank stock returns against a Covid-19 lockdown variable and support measures. The study findings showed tier 1 capital decreased for both countries during the Covid lockdown, while impaired loans increased in the South African market and decreased in the Zimbabwean market. Liquidity coverage ratios were greater in South Africa, while bank stock returns in both markets underperformed the market during the Covid lockdown periods. Regression estimates showed the Covid lockdowns negatively impacted bank stock returns in South Africa but had no significant impact in Zimbabwe. Liquidity support interventions positively impacted returns in both countries, while borrower support measures positively impacted stock returns in South Africa but had no significant impact in Zimbabwe. Study findings point to the need to reform bank regulatory and supervision policies to protect financial institutions more during crises.