The credit rating outlook for the global investment banks is looking brighter for 2018, driven by stronger underlying economic growth, rising rates, and other factors, says a report published Monday by Moody’s Investors Service.

Moody’s has upgraded its outlook for global investment banks from stable to positive in 2018. The change reflects, “improving profitability, broadening global growth, declining tail risk and solid capital and liquidity” in the sector, the report says.

“Profitability will rise, especially in the U.S., while less so in Europe, as interest rates rise and legacy and restructuring costs subside,” saysAna Arsov, managing director at Moody’s, in a statement. “Market disruptions or asset price shocks stemming from unexpected changes in monetary policy remain a tail risk, but our expectation is for a well telegraphed and gradual approach by central banks over the outlook period which would be supportive of financial stability.”

Other factors that are driving the positive outlook for 2018 include, “the emergence of operating leverage even as revenue pressures continue,” the report says.

While capital market revenues remain pressured by low market volatility, which is negatively impacting equity sales and trading, Moody’s expects these ongoing market pressures to be offset by stronger investment banking revenues due to the underlying economic strength, higher net interest margins, the possibility of higher revenues in fixed income sales and trading.

Additionally, banks will also likely see a continuing decline in legacy tail risks over the coming year, the report says, and regulatory changes could reduce U.S. banks’ compliance costs.

“On the whole, the industry balance sheet is safer, bolstered by the enhanced post-crisis regulatory framework,” adds Arsov. “While some policymakers are contemplating revising some regulations to foster greater economic growth, we do not expect potential regulatory changes to undermine the GIBs’ creditworthiness.”