In a significant move, ratings agency Moody’s (NYSE:MCO) has downgraded the credit ratings of multiple U.S. banks, highlighting concerns over growing profitability pressures and the looming possibility of a mild recession.
The agency cut the ratings of 10 U.S. banks by one notch and placed several banking giants under review for potential downgrades, accompanied by a shift in outlook to negative for several major lenders.
Moody’s expressed its caution in light of the challenging economic landscape and the heightened risks banks face due to interest rates and asset-liability management.
The agency’s actions motivate by Q2 results that indicat a decline in banks’ ability to generate internal capital.
The recent collapses of Silicon Valley Bank and Signature Bank (OTC:SBNY) earlier this year fueled a crisis of confidence, leading to a deposit run on numerous regional banks. Despite emergency measures from authorities.
Several banks, including M&T Bank (NYSE:MTB) and Pinnacle Financial Partners (NASDAQ:PNFP), faced downgrades. While others like BNY Mellon (NYSE:BK) and US Bancorp (NYSE:USB) were placed under review. Moody’s also changed its outlook for Capital One, Citizens Financial (NYSE:CFG), and Fifth Third Bancorp (NASDAQ:FITB), among others.
PNC Financial Services Group (NYSE:PNC), Citizens, and Huntington Bancshares (NASDAQ:HBAN) maintained their affirmed ratings.