The credit rating outlook for the world’s big financial firms is stable heading into 2016 despite market weakness and regulatory challenges, according to a new report from Fitch Ratings.
The outlook for the global trading and universal bank sector is stable, “based on strong balance sheets and fair prospects for retail and corporate banking in the groups’ home markets,” the Fitch report says. In additional, moderate loan impairments should continue to support bank earnings, the Fitch report notes, and the credit rating agency expects only a modest increase in impairments next year from low 2015 levels.
These strengths will weigh against further pressure on earnings from capital markets businesses, particularly in fixed-income products, the Fitch report says.
Fitch expects the group of 12 big banks — including Bank of America Corp., Barclays plc, BNP Paribas, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, The Goldman Sachs Group, Inc., HSBC Holdings plc, JPMorgan Chase & Co., Morgan Stanley, Societe Generale, and UBS AG — to “adapt their business models regularly in response to regulatory changes and structural economic shifts,” the report says.
Yet, at the same time, it also says that the credit rating agency sees advantages for banks with strong businesses in the largest markets, which will allow them to avoid going through major strategic changes.