New Delhi, Nov 14 || About 80 per cent of global banks will keep on a stable ratings course in 2025 as easing inflation will help borrowers and reduce stresses on harder-hit sectors including commercial real estate, a report showed on Thursday.
However, S&P Global Ratings said in its report that “we do not envision macro tailwinds will be sufficient to strengthen the credit standing of banks”.
Positive ratings movements will more likely be driven by “idiosyncratic country and bank bank-specific factors”.
According to credit analyst Gavin Gunning, with the interest rate cycle already turning in numerous banking jurisdictions, “some relief is finally within sight for bank borrowers”.
“Banks' asset quality will eventually benefit although the transmission effect will take time and will vary across geographies,” he mentioned.
According to the report, credit costs (a gauge of provisioning) will likely keep rising as a percentage of gross loans. This reflects stresses over the past few years, including via a steep and fast increase in policy rates.
“We forecast global credit losses will increase by about 7 per cent to $850 billion in 2025. Higher credit losses are within our base case at current rating levels for most banks,” the report mentioned.