Bank credit ratings are largely stable, but are trending negative amid several sovereign downgrades, according to the latest report from Fitch Ratings.
The rating agency reports that over 70% of the rating outlooks assigned to banks globally are stable. Nevertheless, it says, a gradual negative shift in ratings is continuing, with 21.5% of global bank ratings on negative outlook in the second quarter, up from 18.8% in the first quarter.
Banks that are in developed markets took the lion’s share of downgrades in in the second quarter, accounting for 60% of downgrades. These were often triggered by sovereign rating actions, Fitch notes, as it downgraded the sovereign ratings of Spain, Greece and Japan during the quarter.
The outlook on bank ratings in the emerging markets also worsened in the second quarter, as the proportion of negative outlooks increased in emerging Asia, emerging America and emerging Europe. The rating actions were either in response to similar actions taken on sovereign ratings, notably in India, Venezuela, Cyprus and Egypt or on parent banks’ ratings, it notes.
There were just 16 upgrades in the quarter, and most of them occurred in emerging markets, notably Russia, Kazakhstan and emerging Americas.