US banks are under pressure from the coronavirus crisis, which could hurt their credit profiles in the long run, according to ratings agency Fitch.
Fitch cut its ratings outlook for America’s banks to “negative” from “stable” last week.
While banks entered this cycle from a position of financial health, they are grappling with liquidity pressures, revenue and earnings challenges,” said Christopher Wolfe, Managing Director and Head of North American Banks, Fitch Ratings.
US banks had been in a more sustainable position, as the 2008 financial crisis spurred new rules for liquidity, capital and regulatory standards.
But that doesn’t mean the outbreak won’t hurt banks. Lower interest rates will make their lending businesses less profitable, for example.
Corporations, meanwhile, need to access credit facilities — which Fitch expects will ultimately be recycled back into the banking industry.
Major US bank stocks are in the red today. JPMorgan (JPM), the largest American bank by assets, is down nearly 4%.
Citi (C) stock is down 1.6%, and Bank of America (BAC) shares are down nearly 3%.
