The outlook for developed market banks, particularly in Europe, is notably gloomier than for emerging market firms, a new report from Fitch Ratings suggests.
The rating agency’s quarterly review of global bank rating trends for the second quarter shows that roughly one quarter of ratings assigned to developed market banks either carry a negative outlook, or are on rating watch negative. In the emerging markets, just 12% of banks are being viewed this way.
The outlook is gloomiest in Europe, Fitch notes, where 30% of banks are on rating watch negative or carry a negative outlook. And, in Europe’s developing markets, it’s 41% of banks.
That said, Fitch reports that global ratings stability is improving, albeit slowly. And, it says that positive rating actions outweighed negatives in the second quarter, which, it says, is “a trend rarely observed in recent years.”
Globally, two-thirds of banks are carrying investment-grade ratings, Fitch reports, although only 7% are rated between ‘AAA’ and ‘AA-‘.