PROVIDENCE – Fitch Ratings has downgraded its collective ratings outlook for U.S. banks from stable to negative over concerns about the financial impact of the new coronavirus, according to a recent news release.
Among the reasons for its decision, the credit ratings agency cited profitability challenges resulting from the Federal Reserve’s cut to near-zero interest rates and decreasing fee income as client activity drops.
The release also noted the pressure facing banks to account for provisioning of credit losses under the Current Expected Credit Loss accounting rules, although the recently passed federal stimulus package lets banks and credit unions delay the new standard until Dec. 31 or whenever the national emergency declaration ends.
Fitch also expected later-quarter results through 2020 to show “adverse effects” on credit quality, particularly for lenders with more exposure to the industries and asset classes most hurt by COVID-19.
The ratings agency will review individual ratings assigned to all U.S. banks in the near future.
Nancy Lavin is a staff writer for PBN. Contact her at Lavin@PBN.com.
