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U.S. Banks Face Coronavirus-Related Challenges in Rapidly Evolving Environment

U.S. banks are facing an onslaught of pressures from the coronavirus pandemic that could the impact the credit profiles of banks to varying degrees, according to a new report from Fitch Ratings. Fitch revised the sector and Rating Outlook for its portfolio of U.S. banks to negative from stable on March 18, 2020, driven by concerns over the financial impact from the novel coronavirus, which causes the COVID-19 disease. 

Chinese Banks to Test Minimum Capital Ratios Due to Coronavirus

Chinese banks' asset quality will deteriorate as Chinese and global growth slows significantly in 2020 because of the economic disruptions caused by the coronavirus pandemic. We recently revised our GDP forecasts, which imply some immediate hits to Chinese banks' asset quality as non-performing loans rise.
 

Coronavirus Worsens Indian Banks' Already Weak Operating Conditions

Fitch Ratings has revised its operating environment mid-point score for Indian banks to 'bb', from 'bb+', as increasing challenges from the coronavirus pandemic are expected to worsen an already difficult operating environment. The outlook on the operating environment is 'negative' due to the uncertainty surrounding the severity and duration of the pandemic and the associated effects on India's banks of restrictions on economic activity.

Coronavirus to Test Philippine Banks' Asset Quality, Earnings

Fitch Ratings has revised our outlook on the Philippines' banking sector for 2020 to Negative from Stable, in the face of rising asset-quality risks amid a deteriorating operating environment as a result of the global coronavirus outbreak.

Sector and Rating Outlook for Canadian Banks Revised to Negative on Virus Impact

Fitch Ratings has revised the Rating Outlook for the Canadian banking sector to negative from stable. The outlook revision is due to increased concerns over the spread of coronavirus and related impacts on banks' asset quality and profitability, which may be materially outside of Fitch's prior expectations.

APAC Banking Outlooks Negative as Coronavirus Heightens Risk

Fitch Ratings has revised the outlook for a further 10 APAC banking systems to negative, meaning that all 17 banking systems in the region are now assessed as having a negative sector outlook. This highlights our expectation that the global coronavirus pandemic will have wide-ranging effects on the region that will adversely affect bank performance in 2020 and into 2021.

Market Volatility Amid Coronavirus Tests Hong Kong Banks' Buffers

Global market volatility that followed another emergency US rate cut this week will further test the resilience of capital buffers for Hong Kong banks. However, the banks have become more prudent in their investment holdings and have built up capital and liquidity buffers since the 2008 global financial crisis, which should provide some cushion against near-term capital erosion from mark-to-market adjustments.

Australia Steps Up Economic Support, Banks to Still Feel Pain

The historic actions taken by the Australian authorities in response to financial market disruption and the growing likelihood of a recession in Australia should provide some support to domestic banks, businesses and households by reducing the cost of borrowing and providing liquidity to the system.

Global Economic Outlook

Coronavirus Crisis Is Crushing Global GDP Growth

The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly "Global Economic Outlook" (GEO)."The level of world GDP is falling. For all intents and purposes we are in global recession territory," said Brian Coulton, chief economist at Fitch Ratings. We have nearly halved the Fitch baseline global growth forecast for 2020 - to just 1.3% from 2.5% in the December 2019 GEO. The revision leaves 2020 global GDP USD850 billion lower than in the previous forecast. 
 

Related Report: Global Economic Outlook

More on Coronavirus

Thai Bank and Corporate Outlooks to Weaken in Sharp Downturn

Thai banks' asset quality and earnings will be significantly weaker in 2020 and Thai corporates face challenging credit conditions because the country's economy will be one of the hardest hit by the coronavirus pandemic in the APAC region, Fitch Ratings analysts told Fitch Ratings (Thailand) Limited's webinar today.

Regulatory Measures Support New Zealand Banks, but Risks Remain

The New Zealand government and other regulatory authorities will continue to support the economy and the banking system in response to the rapidly evolving coronavirus pandemic.

Fed Actions, US Banks Discount Window Use Prudent Amid Turmoil

The decisive and coordinated Federal Reserve (the Fed) actions in response to recent extreme market volatility should allow US banks and markets more time and increased flexibility to adjust to the unfolding coronavirus pandemic

Japan Banks Likely to Face Additional Pressure from Coronavirus

The spread of COVID-19 is likely to add to the challenges Japanese banks are facing including weak profitability and pressure on asset quality and capitalisation. The outbreak is likely to contribute to greater economic pressure due to disruptions to trade, travel and manufacturing, compounding Japan's economic woes after real GDP contracted a revised 7.1% on an annualised basis in October-December 2019 amid a rapid slowdown in world trade.

 

More on Coronavirus

Assessing Global Financial Institutions' Vulnerability to Coronavirus Events

Fitch Ratings is actively assessing its global portfolio of bank, non-bank financial institution (NBFI), insurance company and fund ratings in light of the rapidly evolving coronavirus outbreak. As part of our portfolio assessment process, we are ranking institutions, sectors and regions from most to least vulnerable to the impact of the outbreak.

Updated Bank Rating Criteria May Affect Thai Banks' Tier 2 Issue Ratings

Fitch Ratings will review the National Ratings assigned to the Tier 2 debt of Thai banks following the publication of its updated Bank Rating Criteria on 28 February 2020.

Criteria

Fitch Ratings Publishes New, Enhanced Bank Rating Criteria

Fitch Ratings has updated its 'Bank Rating Criteria' and published today a feedback report following the completion of our criteria exposure draft process. The main changes to criteria reflect continuing developments in bank resolution, the impact this has on banks' organisational and liability structures and the implications for default risk and recovery prospects across banks' liability structures.
 

Related Webinar:
Bank Criteria Webinar 2.0
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Indonesian Islamic Banking Roadmap to Boost Sector Development

Indonesia's new five-year roadmap for the country's Islamic banking sector should provide some impetus to its development, although most benefits are likely to be realised over the medium term rather than the near term. The wide-ranging roadmap addresses the need to strengthen regulations and corporate governance, boost penetration of sharia-compliant products, encourage R&D, and improve human resources in the sector.

MUFG's Grab Deal Entrenches Japanese Banks' Interest in SE Asia

Mitsubishi UFJ Financial Group's (MUFG, A/Negative) investment in Singapore-based ridesharing company Grab illustrates the growing interest that Japanese banks have in expanding in south-east Asia and upgrading their technology capabilities.

Fed Cut Increases Revenue Hurdles for HK Banks as Virus Spreads

The urgency and magnitude of the US Federal Reserve rate cut exceeded market expectations, and with additional cuts in the coming months remaining a possibility, banks in Hong Kong may experience greater pressure on net interest margins than expected for 2020.

Malaysian Islamic Banks' Growing Contribution to Continue

The contribution of Islamic financing to Malaysian banking system loans is likely to rise further, supported by the regulatory backdrop that provides a level playing field and banks that continue to promote Islamic products.

Coronavirus to Hit Global Banks’ Capital Markets Revenue

Uncertainty over the intensity, geographic reach and duration of the coronavirus (COVID-19) outbreak is negatively impacting primary market activity and significantly increasing volatility, making it likely that capital markets revenue at the global trading and universal banks (GTUBs) will be adversely affected.

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ESG Monthly

Our new ESG monthly newsletter includes our global ESG perspectives across all rated sectors and countries, with commentary covering our views on ESG credit risk and the broader macro trends in ESG and the debt capital markets. 

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Morgan Stanley's Pending Acquisition of E*TRADE Is Not Expected to Impact Its Ratings

Morgan Stanley's (MS) announcement of its agreement to acquire 100% of E*TRADE Financial Corporation (ETFC) in an all-stock transaction is not expected to impact MS's Issuer Default Rating (IDR) of 'A' and Stable Outlook, according to Fitch Ratings. The transaction is expected to close in the fourth quarter of 2020 subject to necessary regulatory and shareholder approvals.

Webinar

What Investors Want to Know: India Sovereign and Financial Institutions

Please Join Fitch Sovereigns and Financial Institutions analytical teams as they discuss their views on key issues affecting Indian sovereign, banks and NBFIs.

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Related Content
Indian FIs' Challenges Ongoing Amid Slowdown and Weak Funding

Relaxed Volcker Covered Fund Rule Portends More Deregulation

Fitch Ratings views the recent Notice of Proposed Rulemaking (NPR) issued by regulators to amend the Volcker Rule and relax limits on certain private equity (PE) and hedge fund investments, known as "covered funds" as indicative of loosening regulation and recalibration of post-crisis regulatory rules. 

UK Banks' Operating Environment Score Still Under Pressure

The outlook on Fitch Ratings' 'aa-' operating environment (OE) score for domestically-focused UK banks is still negative due to uncertainty over the future UK-EU relationship. Uncertainty will remain while negotiations on trade and other areas continue during the transition period, which will last at least until end-2020. This could have a negative effect on the UK banking sector if it undermines economic performance.

Latin American Banking Sector Vulnerabilities

Fitch Ratings believes that the five largest banking systems in Latin America (Brazil, Chile, Colombia, Mexico and Peru) are better placed to manage risk in the event of a global financial and economic downturn similar to that experienced in 2008–2010. Regulatory frameworks are stronger than in 2008 with improved risk management and transparency. The financial condition of these banking systems remains solid while currency risks have declined.

 

Read the Report

HSBC Restructuring Should Address Earnings Challenges

HSBC's restructuring plan identifies the main challenges to the bank's business model and, if implemented effectively, should help HSBC retain the key competitive advantages of its global franchise. The bank plans to further increase efficiency and link its US and European operations more closely to its international activities.

US Financials See Rising Risk from Cash Products Amid Libor Sunset

The transition from U.S. dollar (USD) London Interbank Offered Rate (Libor) to its likely replacement, the Secured Overnight Funding Rate (SOFR), presents heightened risks for U.S. financial institutions (FIs), Fitch Ratings says. Banks may face greater legal, operational and reputational challenges from cash products, which have lagged derivatives in moving away from Libor.

Covered Bonds Have Extended Aus, NZ Bank Maturity Profiles

Australian and New Zealand bank liability profiles have lengthened with the increased issuance of longer-dated covered bonds and senior unsecured debt. This has reduced asset and liability mismatches, but we do not expect the lengthening of wholesale bank maturities to continue now that banks have met their stable funding requirements.

India's Budget Targets Slide Amid Growth Slowdown

The Indian government's budget for the fiscal year ending March 2021 (FY21) implies a modest degree of slippage from previous targets to consolidate public finances, says Fitch Ratings. However, its contents are consistent with our expectations when we affirmed the country's sovereign rating at 'BBB-'/Stable in December 2019.

US Regional Banks Seek Alternatives to SOFR for LIBOR Replacements

U.S. bank SOFR adoption as a replacement for USD LIBOR should accelerate in 2020, driven by larger banks with capital markets focus, with slower adoption by smaller, regional banks that may seek alternative lending rates, according to Christopher Wolfe, Managing Director North American Banks.

Thai Deals Highlight Asian Banks' Rising Risk Appetite

A number of Thai banks have looked to expand their international operations in recent weeks, highlighting a trend towards rising risk appetite among banks in Asia. The trend, which has been fed by pressures on profitability, could influence the ratings for some banks venturing into challenging operating environments.

Deutsche Bank Appears on Track with Restructuring Targets

Deutsche Bank appears to be on track with its restructuring targets, but the task of transforming the bank's business model remains formidable. The bank's 4Q19 results show that planned cost reductions in 2019 were achieved, and reported capital ratios exceeded prior guidance.

Sri Lanka SME Credit Support Scheme Has Limited Effect on Banks

A scheme for Sri Lankan banks to provide special credit support to SMEs this year should not have a material effect on banks' credit profiles. We believe that the scheme will prolong the resolution of non-performing loans only until end-2020, and delay capital repayments this year, but banks' improved liquidity due to a slowdown in loan growth in 2019 should mitigate the effects.

Webinar

Quarterly Bank Regulation

Fitch Ratings hosted our quarterly update on global bank regulation. For this first edition in 2020, we looked at the intersection of ESG risks and banking supervision. This follows the publication of several reports analysing the impact of ESG considerations on global banks. We also provided a summary of the last quarter’s regulatory developments, together with a quick take of what is coming up.


Session 1: (Listen Now)
Session 2: (Listen Now)

outlooks 2020

Global Bank Rating Outlooks Are Still Skewed to the Negative

Bank rating Outlooks are still skewed to the negative, although less so than six months' ago. The global share of Negative Outlooks was 13% at end-2019 and the share of Positive Outlooks 5%, compared with 17% and 6%, respectively, at end-1H19.

Digital Banks Credit Negative for Small Malaysian Banks

Malaysia's proposal to grant up to five digital bank licences is likely to intensify competition in the banking industry which is already experiencing margin compression, with the smaller banks potentially more vulnerable.

Online Bank Deposit Growth Undeterred from Rate Cuts

Online banks have cut deposit rates meaningfully since the Federal Reserve began signaling rate cuts in the first quarter of 2019. However, despite their more aggressive rate cuts on retail savings accounts relative to traditional branch-based banks, deposits at the online banks have continued to grow at a strong pace and ahead of the broader industry growth rate.

Taiwan Bank Holding Companies' Leverage, Outlook to Stay Stable

Fitch Ratings expects the common-equity double-leverage ratios (DLR) of Taiwanese bank holding companies to remain stable, reinforcing our stable sector and rating outlook for Taiwanese banks and their holding companies for 2020.

TLAC Issuance in Japan to Continue as Nomura Goes Offshore

Nomura Holdings, Inc.'s (NHI; A-/Stable) issue of Total Loss-Absorbing Capacity (TLAC) eligible senior debt denominated in foreign currency marks the start of its TLAC debt issuance outside Japan, and Fitch Ratings expects the company to issue USD2 billion-3 billion of TLAC eligible instruments annually.

outlooks 2020

Global Banks: Macro Headwinds, Normalizing Credit and Weaker Profitability May Increase Vulnerability

Sector outlooks for Global Banks have turned Negative in 2020 for several key nations, including Japan and Germany, while remaining Negative for the UK, China, and India. However, rating outlooks generally remain stable due to solid capitalization levels and asset quality stability. 

Related Report:
2020 Banks Compendium Highlights Slowing Economic Growth

View all Outlooks: 

Credit Outlooks 2020

Philippine Property Price Surge Heightens Banking Risks

A sustained surge in Philippine property prices over the past three quarters presents rising risks to the country's banking system operating environment, Fitch Ratings says. Recent data point to speculative activity that could affect market stability if unchecked.

ESG Has Growing Influence on Bank Lending to Corporates

Global banks are increasingly taking account of environmental, social and governance (ESG) factors in their underwriting processes. About half of the lending assets covered by the 182 banks that took part in Fitch's ESG survey in 3Q19 had been screened by the banks for ESG risks. 

Webinar

Asia-Pacific Banks 2020 Outlook

Please join Fitch Ratings’ senior analysts from APAC Banks team to discuss the key themes and 2020 outlook for APAC Banks. We are hosting 2 webinars to discuss Emerging Market Banks and Developed Market Banks within APAC.

 

Please click below links to register:

2020 Outlook for Asia-Pacific Developed Market Banks Webinar
Date: Jan 10, 2020 (Friday)
Time: 15:00 HKT

 

2020 Outlook for Asia-Pacific Emerging Market Banks Webinar
Date: Jan 15, 2020 (Wednesday)
Time: 15:30 HKT

 

Related Report:

Vietnam Banks' Capital to Remain Weak After Basel II Delay

The State Bank of Vietnam's decision to offer some banks forbearance on Basel II implementation highlights weak capitalisation in the sector, with many banks in no position to meet the requirements by January 2020.

2019 Canadian Bank Earnings Solid but Point to a More Challenging 2020

Canadian banks' fiscal fourth-quarter 2019 results demonstrated solid loan growth and resilient margins, according to Fitch Ratings. Revenue growth, while down quarter-over-quarter at most of the large banks, was up compared with the year-ago quarter across the group.
 

What Investors Want to Know - Credit Trends for APAC Banks

Jonathan Cornish, Head of APAC Banks, discusses the main credit trend Fitch is monitoring at banks across the region – rising risk appetite to support growth and alleviate pressure on profitability.
 

Related Report: What Investors Want to Know: Asia-Pacific Investment-Grade Banks
Related Commentary: Weaker Environment Exacerbates Challenges for APAC Banks

Outlooks 2020: The Coming Storm

High Indebtedness, Low Growth Shapes 2020 Global Credit Outlook

A combination of slowing economic growth, sustained low interest rates and unprecedented levels of indebtedness will broadly influence the global credit outlook in 2020, says Fitch Ratings. The aggregate rise in global indebtedness in 2019, which occurred as monetary authorities reversed course on rate hikes, will increase vulnerabilities for key sectors in the event of a more rapid than expected economic downturn.
 

Read the ReportFitch Ratings 2020: The Coming Storm

outlooks 2020

China Credit Outlook

Stephen Schwartz, Head of APAC Sovereigns, discusses the outlook for China sovereign, banking sector and LGFVs with Andrew Fennell, Lead China Sovereign Analyst, Grace Wu, Head of Greater China Banks, and Terry Gao, Head of APAC Public Finance.

 

View all Outlooks: Credit Outlooks 2020

Contagion Risk Still High Despite China Shadow Banking Decline

China's determination to reduce the size of shadow banking risks has exceeded expectations, contributing to a faster than expected decline in assets. The authorities' commitment is all the more surprising given the backdrop of a slowing domestic economy and the China-US trade war; notwithstanding, we expect this regulatory commitment to managing shadow banking growth to continue in 2020.

U.S. Banks' Repo Reticence to Continue Even as Fed Reacts

The Fed has recently stepped in to ameliorate repo market volatility; however, the structural issues leading U.S. banks to hoard cash seems likely to persist, according to a new dashboard report from Fitch Ratings. This may continue to present challenges for the Fed in assessing the level of reserves required to implement monetary policy under the ample reserves operating framework.

Fitch Ratings Wins 2 Structured Finance Awards;Named Best in Financial Institutions & Public Finance

Fitch Ratings has been recognised as the best rating agency for structured finance at FinanceAsia's annual 2019 achievement awards and was also voted Australian structured finance rating agency of the year by KangaNews. FinanceAsia also named Fitch as the best credit ratings agency for financial institutions and public finance.

What Investors Want to Know – Australian Banks Outlook

Tim Roche, Senior Director, APAC Financial Institutions, explains our rationale for the negative sector outlook on Australian banks, which reflects our expectation of continued earnings pressure into 2020.

 

Related Commentary: Weaker Environment Exacerbates Challenges for APAC Banks
Related Report: What Investors Want to Know: Asia-Pacific Investment-Grade Banks

Outlooks 2020

Gloomy Economy, Low Rates Put Pressure on Western European Banks

The overall sector outlook for western European banks in 2020 is negative as revenue generation is likely to be pressured by the weak outlook for GDP growth and continued low interest rates, Fitch Ratings says.

 

Related Report:
2020 Outlook: Western European Banks

View all Outlooks:
Credit Outlooks 2020

Webinar

Turkish Banks Outlook 2020 –Sector and Rating Outlooks Remain Negative But Short-term Risks Have Diminished

Fitch Ratings hosted a webinar with Lindsey Liddell, Head of Turkish Banks, and James Watson, Managing Director- Emerging Europe Banks, to discuss the 2020 outlook for Turkish Banks.
 

Listen Now

Global Banks Start to Embrace ESG in their Risk Management

Global banks are increasingly embedding environmental, social and governance factors into their risk-management frameworks, Fitch Ratings says in a new report. More than half the 182 banks that took part in Fitch's ESG survey said they incorporated ESG considerations "always" or "most of the time" into most of their risk-management processes.

Most APAC Bank Sector Outlooks Stable, but Risk Appetite Rising

The sector outlooks on most Asia-Pacific (APAC) banking systems are stable, says Fitch Ratings in two reports published today. However, most banks are increasing their risk appetite in response to pressure on profitability, while the outlooks on four of the region's developed-market banking systems and three of the emerging-market banking systems are negative.

 

Related Report:
2020 Outlook: Asia-Pacific Developed Market Banks
2020 Outlook: Asia-Pacific Emerging Market Banks

View all Outlooks:
Credit Outlooks 2020

Weaker Environment Exacerbates Challenges for APAC Banks

Global macroeconomic challenges are likely to increase pressure on the short-term earnings prospects of investment-grade banks in the Asia-Pacific, Fitch Ratings says in a new report. The report addresses the main questions asked by US and Canada-based investors during a recent tour by Fitch analysts to discuss mainly investment-grade rated banking systems, with particular focus on Australia, New Zealand, mainland China and Hong Kong, Japan, Korea and Singapore.

 

Related Report: What Investors Want to Know: Asia-Pacific Investment-Grade Banks

Outlooks 2020

US Banks See Further Macro Downside, Normalizing Credit in 2020

The ratings and sector outlooks for U.S. banks, while stable, reflect the weakening economic operating environment evidenced by a flat yield curve and declining business confidence, as well as the effects of the Fed's loose monetary policy and a protracted trade war, says Fitch Ratings. U.S. growth, while slowing, is still expected to outpace that of other developed markets.

Kenya Loan Rate Cap Repeal Positive for Banks, Supports Growth

The repeal of Kenya's lending rate cap is positive for the country's banks as it will boost profitability, but loan margins are unlikely to return to pre-cap levels, Fitch Ratings says. It will also support economic growth through supporting a modest rebound in lending and improving monetary policy transmission.

Weaker State Ability to Support GCC Banks

The sovereign's ability to provide support for banks in some Gulf Cooperation Council countries has weakened. Eighty-eight percent of the Issuer Default Ratings assigned by Fitch to banks in the GCC are investment-grade. 

webinar

Fitch Ratings Publishes Bank Rating Criteria Exposure Draft

Fitch Ratings has published an Exposure Draft of its Bank Rating Criteria. Fitch invites market feedback on its proposals by Dec. 31, 2019.

 

Related webinar:
Bank Rating Criteria Exposure Draft

Session 1
Session 2

Outlooks 2020

Canadian Banks to Face Margin Pressure and Higher Provisions in 2020

The 2020 rating and sector outlooks for Canadian banks remain stable, according to Fitch Ratings' 2020 Canadian Bank Outlook report. Banks will continue to see margins compress, higher provisioning expenses, lower commercial loan growth and lower capital markets transaction activity as a weaker global environment and trade-related uncertainty have pressured Canadian commodity prices, business investment and borrowing rates.

View All Outlooks: Credit Outlooks 2020

Korean Banks to Steer Steady Course Despite Macro Challenges

South Korean banks will report a steady performance for the remainder of 2019, despite slowing economic growth. Banks are showing modest decline in profitability (yoy) due to narrower interest margins and slightly higher credit costs, but in line with Fitch's previous forecasts.

Sri Lankan Banks Facing Pressure on Credit Profiles

Pressure on banks' financial profiles due to challenging operating conditions - as reflected in our 2019 negative banking-sector outlook for Sri Lanka - became more apparent in the banks' 1H19 results, Fitch Ratings says in a new report.

China's Merger Plan May Support Clean-Up of Small Banks

China's reported plans for widespread mergers could complement the authorities' efforts to address significant weaknesses at small banks, potentially over time leading to stronger and more transparent institutions.

Webinar

Chilean Unrest: Challenges Ahead

On Demand

Join us for a webinar with the Latin America Ratings Group to discuss Chile’s ratings and the risks the protests pose to economic growth, the fiscal deficit and debt trajectory, and President Piñera’s reform agenda as well as the corporate, bank and insurance sectors in the country.

Register Now

 

Related: Chilean Unrest Has Mixed Effect on Corporate, Sovereign Credit

Strong Fees Offset Margin Pressure for U.S. Banks During 3Q19

On a dollar-basis, third quarter 2019 bottom line results for the majority of the 19 largest U.S. banks were modestly down year over year, according to a new report from Fitch Ratings. However, the healthy state of the U.S. consumer continued to aid fee revenue during 3Q19.
 

Debt Issuance Boom Boosts Bank Capital Markets Activity

The majority of U.S. banks reported double-digit growth figures in debt underwriting in 3Q19, boosting overall capital markets revenues at the five major U.S. by 6%, according to the latest Capital Markets report from Fitch Ratings. Two Federal Reserve rate cuts propelled debt issuances by many corporates as they sought to take advantage of lower rates.

CECL Impact Largest for Consumer Loan-Focused U.S. Banks

The current expected credit loss (CECL) standard will have varying impacts on U.S. banks upon implementation in January 2020, which will diminish comparability of reserve levels, according to a new dashboard from Fitch Ratings.

webinar

Major French Banks

Fitch Ratings recently held an update on the French banking sector, where our analysts provided a peer comparison of major French banks, discussed most recent developments, and analysed key challenges facing the sector. Presenters included:

  • François-Xavier Deucher, Director
  • Rafael Quina, Associate Director

Listen Now

rating action

Fitch Revises MUFG's Outlook to Negative; Affirms Ratings

Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) on Mitsubishi UFJ Financial Group, Inc. (MUFG) and its subsidiaries (together referred to as the group). The Outlook on the group's Long-Term IDRs has been revised to Negative from Stable.

Indian Banks to Face Capital Shortfalls in Event of NBFC Stress

Indian banks would face a capital shortfall of about USD50 billion in the event of a systemic crisis in the non-bank financial company (NBFC) sector, according to a stress test conducted by Fitch Ratings. The credit profiles of the state banks would come under significant pressure, and the weakest - including those with Viability Ratings in the 'b' range - would face heightened solvency risks without capital injections from the government.

Australian Fixed-Income Investor Survey 4Q19

Australian fixed-income investors consider political and geopolitical risk to be the greatest threat to domestic credit markets over the next 12 months. A record-high 74% of respondents consider this to be a high risk; in fact, all top-five risks are linked to politics or possible fallouts from political disagreements, such as a China hard landing or a housing-market downturn.

Related Press ReleasePolitical Disagreements Unsettle Australian

Download the Full ReportAustralian Fixed-Income Investor Survey 4Q19

Muted Impact on Hong Kong Banks From Capital Buffer Reduction

The regulatory decision to reduce Hong Kong's countercyclical capital buffer (CCyB) will not materially change Hong Kong banks' lending behaviour in the near term.

Greek Asset Protection Scheme Is Credit Positive for Banks

The launch of an asset protection scheme in Greece is credit positive for the country's banks, Fitch Ratings says, as it should help them to accelerate the reduction of the large stocks of legacy non-performing loans (NPLs) that weigh on their capital, profitability and ability to lend.

2019 Milken Institute Asia Summit

China: Pathways to Prosperity in an Uncertain Era

Grace Wu, Head of Greater China Bank Ratings, joins other thought leaders at the 2019 Milken Institute Asia Summit in Singapore to discuss China and the potential risks and opportunities on the horizon against an uncertain geopolitical backdrop.

Major French Banks' Cost-Cutting to Support Profitability in 2020

Major French banks' key profitability metrics lag slightly behind their European peers, but cost-cutting programmes, which we expect to bear fruit from next year, could help them close the gap, Fitch Ratings says in a new report.

Webinar

Turkish D-SIBs Capital Adequacy Stress Test

Fitch Ratings hosted a webinar on the recently published report “Turkish D-SIBs Capital Adequacy Stress Test”.  The discussion focused on:

  • Loss absorption capacity of Turkey’s eight domestic systemically important banks (D-SIBs) against a rise in non-performing loans, weaker profitability and lira depreciation.
  • Turkish privately owned D-SIBs better positioned than their state-owned peers against a potential marked deterioration in asset quality.
  • Profitability acts as key differentiator, proven to be a key determinant of banks’ performance under the different stress scenarios.

Listen Now

Rapid Growth Overseas May Put Pressure on Korean Banks' Profiles

South Korea's major commercial banks are likely to be slightly more aggressive in expanding overseas than we previously expected, in line with their parent holding companies' ambitious medium-term growth targets.

 

Related Reports on Korean Banks:

Contacts

Kevin Duignan

GLOBAL

Kevin Duignan

Analytical Group Head

+1 212 908 0630

Jose Santos

Global

Jose Santos

Business Group Head

+34 93 323 9044

Erwin van Lümich

GLOBAL

Erwin van Lümich

Business

+34 93 323 8403

Jonathan Cornish

APAC

Jonathan Cornish

Analytical

+852 2263 9901

Sing Chan Ng

APAC

Sing Chan Ng

Business

+65 6796 7210

James Longsdon

EMEA

James Longsdon

Analytical

+44 20 3530 1076

Alejandro Garcia

LATAM

Alejandro Garcia

Analytical

+1 (212) 908 9137

Diego Alcazar

LATAM

Diego Alcazar

Business

+1 212 908-0396

Christopher Wolfe

NORTH AMERICA

Christopher Wolfe

Analytical

+1 212 908 0771

John Bareiss

NORTH AMERICA

John Bareiss

Business

+1 312 368 3162

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