S&P Global – Banks Country-By-Country, 2023

The global banking industry is expected to remain stable, with 79% of bank rating outlooks being stable as of October 2023. This is attributed to strong capitalization, improved profitability, and sound asset quality. However, the weak economic outlook for 2024 will pose challenges for banks in terms of business volumes, asset quality, and financing conditions. Fortunately, most banks' earnings will still benefit from high interest rates. There are certain key risks that could potentially worsen. Although it is not the base case scenario, there is a possibility of a significant deterioration in economic conditions in Europe, the US, and China, accompanied by high inflation. Additionally, the ongoing conflicts between Russia-Ukraine and Israel-Hamas could have spillover risks. The commercial real estate markets in some jurisdictions, particularly the US, China, and some European countries, are experiencing a notable downturn. Demand and prices are falling, leading to related losses that will be manageable but will have a lasting impact for a few years. It is expected that there will be an increasing credit divergence, particularly for nonbank financial institutions and entities with weak funding profiles or direct exposure to geopolitical risk.