The trend in credit rating outlooks for global banks has shifted lower since mid-2018, reports Fitch Ratings.
The number of bank ratings with a negative outlook has increased since the middle of last year, the rating agency said Monday, with the share of negative outlooks globally finishing the year at 13%, compared with 10% at mid-2018.
The increase in negative outlooks follows sovereign-driven revisions in Italy and Latin America, Fitch says in a release. In August, the rating agency revised Italy’s outlook to negative, leading to negative outlooks on the ratings of five Italian banks.
“A reduction in the sovereign rating would most likely lead to downgrades of these banks, and other Italian bank ratings could also come under pressure if refinancing conditions become more difficult or if banks’ asset quality weakens significantly,” Fitch says.
Banks in emerging markets in the Americas had the highest proportion of negative outlooks by the end of 2018, at 29%, says Fitch, banks in Argentina and Mexico represent half of the region’s negative outlooks.