MADRID, 8 Ago. (EUROPA PRESS) -
The credit rating agency Moody's has lowered the solvency note of the debt of a dozen small and medium-sized banks in the United States, while it has placed six other banks under review for a possible rating cut size and has reviewed the outlook on the ratings of eleven more entities.
In its analysis, Moody's warns that US banks continue to grapple with risks related to interest rates and asset liability management with implications for liquidity and capital, as the end of unconventional monetary policy drains funds. system-wide deposits and higher rates reduce the value of fixed-rate assets.
"The second-quarter results of many banks showed increasing profitability pressures that will reduce their ability to generate internal capital," says the risk rating agency, noting that this circumstance occurs when a mild recession is looming in the US for the beginning of 2024 and asset quality looks set to worsen from strong but unsustainable levels, with particular risks in some banks' commercial real estate (CRE) portfolios.
In this way, Moody's considers that the increase in financing costs and the decrease in income metrics will erode the profitability of entities, the first buffer against losses, something that could already be seen in the accounts published for the second quarter, while that, despite the fact that the flight of deposits caused by quantitative tightening (QT) has moderated, there is still a significant risk that deposits will resume their decline in the coming quarters.
Furthermore, the results show that banks have reduced loan growth to preserve capital, but this will slow the shift of balance sheets towards higher-yielding assets, even as funding costs rise and banks face investment of the yield curve, notes the agency.
On the other hand, Moody's cautions that most regional US banks have comparatively low regulatory capital compared to larger US banks and their global peers, which, in the current high-rate environment, leaves some banks vulnerable to a loss of investor confidence.
"In addition, we expect a recession in the US at the beginning of 2024 to worsen the quality of banks' assets and increase the potential for capital erosion," warns the agency, for which the proposed increase in regulatory capital for entities with assets above 100,000 million dollars (90,948 million euros) is positive for solvency, but in the short term it will come with higher regulatory costs and may imply changes in the business model that will put pressure on the profitability of some banks .
In this way, Moody's has downgraded the long-term solvency rating of a dozen small entities, including the ratings of M
Likewise, the risk rating agency has placed the notes of six other entities such as Bank of New York Mellon, U.S. Bancorp, State Street, Truist Financial, Cullen/Frost Bankers, and Northern Trust.
For its part, the agency has downgraded the rating outlook of eleven other banks to negative, including some as prominent as Capital One, Citizens Financial, PNC Financial Services Group, Ally Financial or Fifth Third Bancorp.