The international financial services and insurance sectors are set to be among the industries least impacted by Covid-19, according to a report from the Department of Business, Enterprise and Innovation.
The assessment does not include the domestic banks, which have all posted interim losses this year due to the global pandemic.
Nonetheless, the sector is a significant employer here, with over 44,000 working in the area.
The industry’s output for 2020 is forecast to be 94pc of pre-coronavirus levels, the report states. Next year output is expected to be 93pc of pre-Covid levels.
Dermot O’Leary, chief economist at Goodbody Stockbrokers, said the pandemic is affecting different sectors in different ways, with some performing better than others.
“The international financial services sector has not been impacted to a great extent because of the ability for people to work from home and the rebound in the futures markets,” he said.
The rebound in the performance of the markets can be put down to two main factors, according to Mr O’Leary.
“Markets are forward looking, they believe this is a short-term severe shock. They are taking the view that it won’t be a long lasting impact on the performance of companies,” he said.
The markets are also taking into account the level of support from national governments, Mr O’Leary added.
Also, compared to the previous global financial crisis in 2008 – when many major financial institutions had huge debt exposures – international financial services companies are better capitalised with greater diversity of loans and a more manageable credit risk exposure, according to the report.
“Central Bank of Ireland frameworks and systems created post the banking crisis have stood the test of time – as a result, the companies in Ireland have been coping very well with the crisis, continuing to support customers,” it said.
While some niche sectors in the industry in Ireland have been exposed, including aviation, travel insurance, and foreign exchange operators, most areas of the sector appear to be performing “relatively steady.”
Despite the strong performance from the sector, as of mid-June, around one in four people working in the finance, insurance and real estate are estimated to be on the pandemic unemployment payment or temporary wage subsidy scheme. In the early stages of the crisis there was a surge in business activity among IDA Ireland-backed financial services clients here, with market volatility and transaction volumes up.
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