S&P Global – Global Banks Outlook, 2024

S&P Global's outlook for global banks in 2024 remains steady, with 79% of bank rating outlooks being stable as of October 2023. This stability is due to solid capitalization, improved profitability, and sound asset quality. However, the weak economic outlook poses challenges for banks in terms of business volumes, asset quality, and financing conditions. On a positive note, most banks' earnings will benefit from high interest rates. There are key risks that could potentially intensify. While it is not the base case scenario, a significant deterioration of economic conditions in Europe, the US, and China is possible, especially with high inflation. The ongoing conflicts between Russia and Ukraine, as well as Israel and Hamas, also bring spillover risks. Commercial real estate markets are experiencing a significant downturn in some jurisdictions, particularly in the US, China, and certain European countries. Demand and prices are falling, and related losses, although manageable, will be felt for several years. S&P Global anticipates increasing credit divergence, with more pressure on nonbank financial institutions and entities with weak funding profiles or direct exposure to geopolitical risk.