Fitch reports global bank rating Outlooks still negative

Written by Michael Griffiths

23/01/2020

Fitch Ratings has announced its global bank rating Outlooks are still negatively skewed, although to a lesser degree than they were six months ago.

The credit rating agency’s global share of Negative Outlooks was 13% at the end of 2019 while the share of Positive Outlooks was 5%, compared with 17% and 6% respectively, at the midway point of the year.

Fitch revealed that emerging markets in the Americas had the highest share of bank ratings on its Negative Outlook, at 31%, which it said mostly mirrored the Negative Outlooks on several Latin American sovereigns.

In developed markets, Fitch suggested most Negative Outlooks were due to earnings pressure amid low interest rates, although several Italian banks were on Negative Outlook due to the sensitivity of their ratings to the Italian sovereign rating – BBB/Negative.

The Outlook balance benefited from the stabilisation of Outlooks on Turkish banks with ratings driven by state or institutional support, as well as from the removal of the Rating Watch Negative on UK banks in December 2019 – reflecting the reduced short-term risk of a disruptive no-deal Brexit, Fitch indicated.

The credit ratings agency added that another factor affecting its Outlook was the higher share of banks without an Outlook, following widespread downgrades to the ‘CCC’ range and below in Argentina and Lebanon.

Fitch reported 33 downgrades and 46 upgrades in the second half of 2019 – with downgrades mostly concentrated in Turkey (13) and Argentina (six), where they followed sovereign rating actions.

Russia accounted for 20 upgrades and Ukraine for another seven, which Fitch said was mostly driven by greater sovereign ability to provide support, or an increased propensity of foreign owners to provide support, following sovereign upgrades.

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