On Jan 27, Fitch Ratings had a sombre message for investors of banks. Its newly-updated interactive country-by-country map of bank rating trends shows that nearly 60% of bank ratings were still on Negative Outlook at end-2020, with just a marginal decrease from end-1H2020. “There were virtually no ratings on Positive Outlook or Rating Watch Positive,” the ratings agency says.

While immediate risks to banks have been largely avoided during the pandemic, medium-term risks remain from the gradual withdrawal of government support for the economy and for borrowers, Fitch Ratings indicates; and a high proportion of Negative Outlooks may persist well into 2021.

Among the regions, Negative Outlooks/ Watches are least widespread in Asia Pacific. “Stable Outlooks were more common in these markets, mostly due to the prevalence of ratings driven by our belief that banks would receive support, if needed, from a sovereign or parent institution that itself was on Stable Outlook. In addition, many banks had headroom in their Viability Ratings,” Fitch says.

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