Fitch says that the number of bank downgrades declined to 94 in the last quarter, from 109 in the first quarter of the year. It also found that fewer emerging market banks were downgraded, 26 compared with 50 in Q1.
Fitch took 170 negative ratings actions in Q2, compared with 188 in the previous quarter. At the end of Q2, 64 per cent of banks rated by Fitch globally had stable outlooks. The total number of rating actions continued to decline, to 183 in Q2, which compares with a quarterly peak figure of 294 in Q4.
The number of negative outlooks in developed Europe remained relatively flat at end of Q2 at 49, down from 50 in Q1 2009, but European downgrades remained the most numerous among the three regions in the developed world markets.
The two major European bank downgrades over the two quarters were Credit Suisse and Deutsche Bank, who both remain on negative Watch from Q1. Fitch also mentioned Newcastle building society, which was placed on negative watch during Q2.
Fitch financial institutions team managing director in Bridget Gandy says: “Fitch believes that the global economic downturn is now close to its trough. Nevertheless, banks globally will continue to operate in a tough environment, as loan impairment charges rise as more companies default and unemployment rates continue to worsen.
“Earnings to absorb losses will remain under pressure as a result of tight margins during a prolonged period of low interest rates, as well as lower lending as banks deleverage.”