How COVID-19 Is Affecting Bank Ratings: October 2020 Update

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View Analyst Contact Information (Editor’s Note: This commentary is an update of “How COVID-19 Is Affecting Bank Ratings: June 2020 Update,” published on June 11, 2020. It includes our latest rating actions and publications.) Bank ratings across the world continue to come under pressure from repercussions of the pandemic and […]

(Editor’s Note: This commentary is an update of “How COVID-19 Is Affecting Bank Ratings: June 2020 Update,” published on June 11, 2020. It includes our latest rating actions and publications.)

Bank ratings across the world continue to come under pressure from repercussions of the pandemic and oil shock. Yet, our central scenario remains that bank ratings will stay largely resilient for four key reasons:

  • The generally strong capital and liquidity position of banks globally at the onset of the pandemic, supported by a material strengthening in bank regulations over the past 10 years;
  • The substantial support and flexibility that banking systems receive from public authorities to entice them to continue lending to households and corporates, whether in the form of liquidity or credit guarantees, and relief on minimum regulatory capital and liquidity requirements;
  • The unprecedented direct support that governments provide to their corporate and household sectors; and
  • The likelihood, in our base-case scenario, of a 5.3% rebound in global GDP in 2021 after a sharp contraction by 4.1% this year, even if this contraction and ensuing recovery vary considerably between countries.

About one-third of our bank ratings globally currently carry negative outlooks or are on CreditWatch with negative implications. This follows the actions we took in April and May on the back of downward revisions to our economic forecasts. We currently assume a gradual recovery in many economies (see table 1), with risks to our central scenario including extended COVID-19 containment measures due to the recent resurgence in cases in certain countries and the transition to post-COVID-19 policies (see “Global Credit Conditions: The K-Shaped Recovery,” published Oct. 6, 2020, on RatingsDirect).

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The current consensus among health experts is that COVID-19 will remain a threat until a vaccine or effective treatment becomes widely available, which could be around mid-2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.

We expect that 2021 won’t be any easier for banks. Support from public authorities for economies and directly for banks, and forbearance by bank regulators, is expected to be temporary, designed to bridge the gap between the immediate negative effects of the pandemic and an anticipated sustainable economic recovery. Should the spillover effects on banks from the pandemic be worse or longer lasting, we may revise the central scenario that currently underpins our ratings, which could lead to downgrades. Should a sustainable recovery take hold, we could revise many of the outlooks on bank ratings back to stable. However, we believe it will take some time for banks’ performance to rebound to pre-COVID-19 levels.

Positively, public authorities around the world to date have viewed their banking systems as a conduit for economic and monetary policies, aiming to reduce the immediate impact of the economic stop associated with measures to contain the coronavirus. They have implemented a broad array of measures to incentivize banks to continue lending and show flexibility toward struggling customers. In return, banking systems are receiving massive liquidity support, and regulations are being relaxed temporarily (see “Bank Regulatory Buffers Face Their First Usability Test,” published June 11, 2020). Nevertheless, some governments have less latitude to provide support.

Banks’ creditworthiness ultimately remains a function of the economies they serve. Our current expectation of a strong rebound in many markets in 2021 suggests that short-term forbearance activity at this stage may limit credit losses later. But the long-term stress many customers experience will, over time, flow through to banks’ profit-and-loss statements. These assumptions underpin our central scenario of loan losses doubling to more than US$2 trillion over 2020 and 2021 (see “The $2 Trillion Question: What’s On The Horizon For Bank Credit Losses,” published on July 9, 2020). The degree to which banks’ financial strength can accommodate the dip prior to the forecast rebound will also be a key rating consideration.

In determining which bank ratings could be affected the most, we take into account the headroom within individual bank ratings for some deterioration in their credit metrics as well as their relative exposure to the most vulnerable sectors and customers. We also consider the relative effectiveness of their public authorities in curbing the credit impact on customers and supporting a rapid rebound once the situation abates. Finally, we factor in how sovereign support influences ratings, and how subsidiaries fare in the context of group rating considerations.

The bank rating actions we took at the start of the pandemic were in jurisdictions and on entities most immediately affected by the evolving scenario, with the oil shock in many cases amplifying the expected impact of the containment measures. In late April and early May, we took actions (mainly outlook revisions) more reliant on longer-term considerations. For banking industries that entered this crisis with structurally weak profitability, such as many in Western Europe, we expected profitability would likely weaken further due to a deterioration in asset quality because of the COVID-19 shock. At the same time, our thinking was that banks cannot count on a rebound in revenue because, again due to the pandemic, rates will likely stay even lower for even longer. Moreover, the potentially sharp rise in credit loss provisions could hit the capital positions of banks with weak profitability more immediately than those generating more comfortable earnings.

Slowdown In Rating Actions Since Early May

Since we last updated this report on June 11, 2020, negative rating momentum has slowed down materially: we have taken 26 negative rating actions on banks, of which 17 outlook changes (see Appendix 2: COVID-19 And Oil-Shock-Related Bank Rating Actions As Of Oct. 16, 2020). Downgrades in Costa Rica were driven by deteriorating macroeconomic environments and sovereign-related factors. We revised the outlooks on several Peruvian, Thai, and Philippine banks to reflect our view that the economic slowdown will place additional pressure on earnings and asset quality.

Very recently, we also lowered to ‘SD’ from ‘CC’ the rating on Argentina-based Banco Hipotecario following the completion of its exchange offer, which we viewed as distressed. We subsequently raised the rating to ‘CCC+’ as we believe that that the bank’s refinancing risk on its residual debt has decreased. In Chile, we lowered to ‘D’ from ‘CC’ the rating on Chilean conglomerate Corp Group Banking S.A. following expiry of the grace period on a missed coupon payment.

We also took negative rating actions on three U.S. entities: a downgrade on the operating entity of Wells Fargo and an outlook revision on our rating on M&T Bank Corp.

For more information on our rating actions in June or earlier, see “How COVID-19 Is Affecting Bank Ratings: June 2020 Update.”

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Recovery Will Stretch To 2023 And Beyond

As for the corporate sector globally, where the effect of the pandemic on industries and regions has been highly variable, the hit on banks is also uneven (see “COVID-19 Heat Map: Updated Sector Views Show Diverging Recoveries,” published Sept. 29, 2020, and “Global Banking: Recovery Will Stretch To 2023 And Beyond,” Sept. 23, 2020). A key difference between companies and banks is that the impact on bank creditworthiness is a “slower burn.” The economic spillover of COVID-19 on banks is more a secondary factor, rather than primary.

The effect of COVID-19 on large diversified banks is spread across a very large number of borrowers. The performance of these banks is more likely to mimic the shape of the economic recovery, compared with many corporate sectors, but with a lag.

It takes time for an economic downturn to manifest itself in bank creditworthiness. It also takes banks time to benefit from an economic recovery, given they are working through nonperforming loans accumulated during a downturn.

Some corporate sectors are more procyclical than banks. We also note that banks didn’t see the increase in leverage that many corporates experienced in the run-up to the pandemic. This is mainly because of banking regulations and prudential guidelines constraining banks’ activities, including leverage.

As a result, we have lowered our ratings on a smaller proportion of banks than in most other corporate sectors. But we expect the recovery of banking sectors to pre-COVID-19 levels will be slow, uncertain, and highly variable by segment and geography (see “Global Banking: Recovery Will Stretch To 2023 And Beyond,” published on Sept. 23, 2020). Many prominent banking systems may not recover until 2023 (see chart 5).

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Why Bank Ratings Have Been Relatively Resilient So Far

The first factor underpinning the resilience of bank ratings is our base-case scenario of an only relatively short economic contraction–albeit a very severe one. Under our latest base case, we see global GDP falling by 4.1% this year, with the U.S. and eurozone contracting by 4% and 7.4%, respectively (see “A Double-Digit Rebound Has Begun, But It’s No Time To Celebrate,” published Oct. 6, 2020). We expect global growth to rebound to 5.3% in 2021 (see table 1).

S&P Global Ratings’ GDP Growth Forecasts
(%) 2019 2020 2021 2022 2023
U.S. 2.2 (4.0) 3.9 2.4 2.6
Eurozone 1.3 (7.4) 6.1 3.0 2.0
China 6.1 2.1 6.9 4.8 5.2
Japan 0.7 (5.4) 3.2 1.0 0.9
India* 4.2 (9.0) 10.0 6.0 6.2
Brazil 1.1 (5.8) 3.5 3.0 2.9
World¶ 2.8 (4.1) 5.3 3.8 4.0

While the threat from COVID-19 persists, many key economies fared better than expected in the third quarter as households stepped up spending in the U.S. and Europe, and the Chinese government ramped up infrastructure investment. The majority of advanced economies surprised on the upside, while developments in emerging markets were mixed. But the good news only goes so far: The big bounce is largely mechanical, and the next leg of the recovery will be more difficult. We assume that the massive liquidity support provided by central banks around the world will continue to prove effective in curbing funding and liquidity risks for banks and financial markets in general in most jurisdictions. These include the Federal Reserve’s $2.3 trillion lending programs and the European Central Bank’s (ECB) €1.2 trillion increase in the volume of targeted longer-term refinancing operations (TLTROs), its €750 billion Pandemic Emergency Purchase Programme (PEPP), and its recently announced Pandemic Emergency Longer-Term Refinancing Operations (PELTROs).

What is more, unlike during the 2008 global financial crisis, banking sectors have not been a direct source of stress or an amplification of travails for the real economy. Indeed, some elements of monetary and fiscal policy responses, such as keeping low-cost credit flowing to households and businesses or applying forbearance measures on their loan repayments, rely on operationally effective and robust banking systems for their delivery.

Most banking sectors have gradually emerged from the financial crisis better capitalized, better funded, and more liquid. We estimate, for instance, that the capital base of the largest banks about doubled over the past 10 years. According to the Bank for International Settlements (BIS), between June 30, 2011, and June 20, 2019, the Common Equity Tier 1 capital of the largest 100 banks increased by 98%, or by around €1.9 trillion. This comes on top of a material derisking of a number of banks’ exposures during that period. Comparable progress has been made in terms of bank liquidity. COVID-19 will put the brakes on a decade of capital strengthening, and we project only a marginal decline in our capital metric. Therefore, we view the capital strength of these banks as largely unchanged (see “Top 100 Banks: COVID-19 To Trim Capital Levels,” published on Oct. 6, 2020).

Technology has also been an ally of banks in this crisis. Despite geographic variations, banks have for years been investing in their digital transformation and adopting new technologies to meet customers’ evolving expectations and–in some cases–reduce costs. In a context of social-distancing requirements, this has enabled most banks to transition a large part of their operations away from office and branch environments, while continuing to transact with customers. Indeed when lockdown measures are lifted, given customers’ likely sustained caution on social distancing and increased comfort using digital channels, the pandemic may add momentum to the already rapid shift away from branch-based interactions (see “Social Distancing Spurs Digital Banking In Asia-Pacific,” published on June 3, 2020).

Despite these improvements, coming into this crisis our ratings on many banks were constrained by structurally weak profitability (for example in Western Europe and Japan) and the expectation, at some point, of a turn in the credit cycle, even if we certainly didn’t foresee a turn of this nature and velocity. As a result, we believe that most of our bank ratings were positioned to anticipate some deterioration in their operating environment and credit metrics.

What To Look Out For

Our central scenario is that we will unlikely lower the ratings on the majority of banks across jurisdictions in the near term as a result of the COVID-19 pandemic. This is because government support packages cushion the impact on households and corporate borrowers and, in turn, banks, and we expect a gradual withdrawal of these measures. That said, the contours of the recovery are still hard to predict, and the risks to our baseline macroeconomic forecast remain firmly on the downside. We reflect these risks in the negative outlooks we’ve assigned to about 30% of bank ratings globally, with regional differences. Note that a negative outlook typically signals at least a one-in-three chance of a downgrade within the next 24 months for banks with ratings ‘BBB-‘ or above and within the next 12 months for banks rated below that level. In contrast, CreditWatch placements typically signal a more imminent and higher likelihood of rating changes.

We could take further negative rating actions if we expect the cyclical economic recovery to be substantially weaker or delayed, as this would imply a far more negative effect on bank credit strength. Actions could also follow idiosyncratic negative developments at individual banks. Some downgrades could occur in cases in which we expect a bank’s metrics to move durably outside our rating outlook drivers. Full-year numbers to be published in early 2021 will in many cases better show the impact on asset quality associated with the COVID-19 stress. But they won’t give the full picture, as we expect many of the support measures to remain in place through 2020.

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Also factored into our negative outlook bias is the likelihood of durable pressure that many banks will experience on their financial performance. Once the dust settles and economies around the world recover, the earnings’ recovery for banks is unlikely to be as sharp as the GDP rebound from this crisis. Many banks will face customers that may be prone to deleverage, a cost of risk that will likely be well above pre-COVID levels, and lower rates for even longer. All these factors will likely durably dent earnings that were already feeble in some regions at the onset of the COVID-19 pandemic. They will also force many banks to undertake a further round of structural measures to address chronic performance issues.

We will also monitor the long-term effect of the current relaxation of various bank regulations, for instance in terms of capital buffers and forbearance. The short-term impact over the next few months is likely to be positive for banks (see “Bank Regulatory Buffers Face Their First Usability Test,” published June 11, 2020). It should enable them to maneuver through the worst part of the crisis, and in line with the original intentions of these regulations. Chiefly, it gives banks more flexibility to manage the immediate–supposedly short-lived, but acute–crisis.

But it is still too early to predict whether some of these changes could become more durable. If so, a long-term term weakening in banks’ capital and liquidity targets, or less transparency in recognizing bad debt and delays in adequately provisioning for it, could lead to durably weaker balance sheets and erode investor confidence. A weakened prospective capitalization of banks would affect a number of ratings over time, both in developed and emerging markets.

Over time, we expect the significant differences we’ve observed in the past quarters in the way banks book provisions against future credit losses to diminish, albeit only to a degree. The strongest and more conservative ones are typically faster in recognizing weaker exposures and provisioning for future potential problems. Given investor focus on provisioning, we expect that, if they haven’t done so beforehand, banks will use the announcement of full-year results to carefully explain the assumptions and policy effects that underlie their reported asset quality developments and provisioning.

As illustrated in their first-half results, compared to banks in many other jurisdictions, U.S. banks took some of the largest provisions, all else being equal, because of the Current Expected Credit Losses (CECL) accounting standard. CECL requires banks to set reserves for expected lifetime losses on their loans. As banks increase their expectations for those losses, they may have to increase reserves markedly. While that weighs on earnings and capital initially, it should mean their provisions will be lower in future periods than they otherwise would have been, with some early evidence of this in third-quarter results.

Most fundamentally, the COVID-19 pathway varies markedly across jurisdictions and is difficult to predict. This in turn will play out differently for banks’ financial strength. For example, the GDP shock following the onset of COVID-19 took hold quickly in China but is now stabilizing. By contrast, in India, the GDP shock took longer to manifest itself but appears more severe and will test the resilience of ratings on domestic financial institutions.

Which Banks Are Most Exposed To Rating Actions?

Differences in the proportion of negative outlooks (see chart 4) highlight the jurisdictions most likely to see changes in ratings. Factors we consider in determining whether the ratings on a bank are exposed to material downside risk in the present context include:

  • The current rating level, including to what extent there is room within it for a deterioration in credit metrics.
  • The relative exposure of the bank and the jurisdiction in which it is based to COVID-19-related downside risks and the oil shock. This includes exposure to hard hit industries (such as transportation, tourism, oil and gas, gaming, lodging, restaurants, and transport sectors) or types of lending (such as SMEs, leveraged loans, commercial real estate, and unsecured consumer loans). Banks’ relative exposure to possible fund outflows (as is the case in certain emerging markets) or concentration risk to single name exposures or particular industries may also exacerbate issuers’ vulnerabilities.
  • The ability and willingness of the authorities to provide support to their banking systems and banks’ customers, and our expectation of the effectiveness of these measures in reducing the short-term impact while laying the foundations for a rapid recovery of the economy.

Given the various links between sovereign and bank ratings (such as government support, strength of the economy, exposure to sovereign debt), some ratings actions (including outlook changes) may follow similar actions on sovereign ratings. This can occur, for instance, in banking systems that receive rating uplift for government support, as was the case in the outlook revisions on a number of systemically important banks in Australia and Malaysia on the back of similar actions on these sovereigns in April. Our bank ratings may also move independently from such sovereign actions, especially given the differences in the risks considered by sovereign and bank ratings. Bank ratings, furthermore, tend to be lower than those on sovereigns, and lower ratings indicate a greater vulnerability to shifts in economic and business conditions.

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Concentrations in business models and exposures can increase banks’ sensitivity to a deterioration in their operating environment. For instance, earlier during the pandemic, we revised outlooks on a number of regional U.S. and Italian banks to reflect these potential vulnerabilities (see “Six U.S. Regional Banks Outlooks Revised To Negative On Higher Risks To Energy Industry,” published March 27, 2020). We could in a number of markets see further differentiation in our rating actions between larger and less diversified players.

The relative position of banks at the onset of the crisis will also drive some differences in their vulnerabilities to the unfolding stress scenario. In terms of profitability, U.S. banks and many Asia-Pacific banks (ex-Japan) entered this period in a stronger position than in many other jurisdictions, which should give them a somewhat better ability to absorb earnings pressures. Still, even for U.S. banks, ultra-low interest rates will weigh meaningfully on profitability.

Similarly, variations in asset quality at the onset of the crisis may offer some jurisdictions more buffer for a deterioration in metrics. Not affected by the global financial crisis to the same extent as some other regions, certain large banks in Asia-Pacific, for instance, demonstrated consistently strong metrics, leading into the COVID-19 pandemic, even if the asset quality of most peers in all regions had been on an improving trajectory in recent years.

It should be noted that the wholesale funding markets have been relatively stable and orderly amid the COVID-19 crisis, in contrast with some previous crises. This is partly thanks to proactive actions by central banks, which are likely to continue to play a prominent role until the economic recovery takes hold. However, because banks are confidence sensitive, a sizable dislocation in the funding markets at this time would weigh further on bank creditworthiness.

Early on in the pandemic, the vast majority of the rating actions we took (including outlook revisions) on banks were in emerging markets. This reflected generally lower ratings and the specificities of some of these banking systems. Based the material downward revision of our macroeconomic forecasts in April, which included a number of developed markets, and given some of the rising potential second-order effects, the gap in the proportion of rating actions between emerging and developed markets has decreased.

Asset Quality And Capital Outflows Will Expose Some Emerging Markets

In addition to asset quality deterioration that we expect for banks in developed markets, some banks in emerging markets are also exposed to additional sources of risks including:

  • Heavy reliance on external funding amid changing investor sentiment.
  • Concentration of their economies on specific sectors (such as the hospitality sector or industrial or service exports to developed countries) or commodities (such as oil or gas).
  • Lack of government capacity to provide extraordinary support, weaker governance and efficiency of government institutions, and a higher likelihood of political and social tensions.

For banks in Gulf Cooperation Council countries, asset quality deterioration is set to accelerate as regulatory forbearance measures fade over the next six-12 months. With lower interest rates and lending growth, a few banks might be showing losses in 2020 or 2021 because of their exposure to high-risk asset classes (SMEs or credit cards, for example) or underprovisioning.

Currency depreciation will likely contribute to the deterioration in asset quality and in the capital position of Turkish banks, due to the still high level of foreign currency loans. In addition, we expect pressure on funding profiles as banks face the rollover of a large amount of external debt. For South African banks, we expect that cost of risk will remain high over the next couple of years and return to 2019 levels only from 2023. However, despite higher credit losses, the major banks are likely to remain profitable through the period. Banks’ dependence on external funding remains limited, and the central bank is providing support.

We expect credit losses in Russia to increase in 2020 and then gradually decline toward normalized levels beyond 2022. We consider that banks are facing the current stress in better shape than during previous crises. Russian banks also benefit from a stable base of domestic deposits, available liquidity support from the central bank, and limited exposure to external funding.

Brazil’s central bank’s comprehensive set of measures has lessened the impact of COVID-19 and provided incentives for banks to boost lending and support the corporate sector. That said, because of the expected deterioration in asset quality, banks boosted provisions for credit losses, jeopardizing bottom-line results. On the other hand, risks to asset quality remain, given the uncertain outlook for economic activity and employment, although Brazil has recently performed better than expected due to the combination of strong stimulus and relatively loose containment measures.

Economic recovery will take longer in Mexico because of pre-pandemic structural weaknesses and the relatively small policy response to the crisis caused by COVID-19. Mexican banks, in general, entered this crisis with historically low levels of nonperforming assets and credit losses. This reflects their relatively low leverage as measured by credit to GDP. However, COVID-19 will hit asset quality and profitability.

We expect to see a greater divergence in the performance of the larger and smaller banks in some of these markets. In Latin America, operating performance could weaken substantially for smaller banks and nonbank financial institutions with concentrations in economic sectors hit hard by fallout from COVID-19.

Similarly, we expect the impact of the crisis on the largest Chinese banks to be manageable, while smaller banks with aggressive risk appetites or high geographic concentration in heavily hit regions could see a material squeeze on their asset quality, performance, and capitalization (see “China Banks After COVID-19: Big Get Bigger, Weak Get Weaker,” published April 17, 2020). Still in Asia Pacific, we also expect the banking systems of Indonesia and India to be among the hardest hit. Indonesia’s role as a major commodity exporter and Indonesian corporates’ reliance on foreign currency funding, with sizable unhedged portions, will weigh on asset quality (see “Outlook On Indonesian Banks Revised To Negative As Operating Conditions Worsen; Ratings Affirmed,” published April 28, 2020). However, Indonesian banks’ strong capitalization and reserves offer some succor.

We expect Indian banks’ nonperforming loans to shoot up to 10%-11% of total loans by March 2021, amid a 9% economic contraction. Like other countries, the true extent of weak loans in India is masked by loan restructuring. The Reserve Bank of India has allowed banks one-time restructuring without classifying restructured loans as nonperforming. In our base case, we expect banks may restructure about 5%-8% of loans. Stress on the banking system has been somewhat eased by a government guarantee for SME loans and a partial credit guarantee for retail loans securitized by finance companies. Indian banks also benefit from strong domestic savings, and the ratings of the state-owned banks (that dominate the sector) benefit from our view of a very high likelihood of government support.

Credit risk is also elevated in Thailand, given the very high level of household debt (79% of GDP), relaxed lending and underwriting standards, and vulnerable SMEs. Capital buffers and strong reserves will provide some protection.

Recent BICRA Revisions Highlight Our More Negative Outlook Bias

We have recently revised a large number of our systemwide assessments, banking industry country risk assessments (BICRAs). Since March 20, we have revised:

  • Our economic risk trend to stable from positive for Bermuda, Cyprus, Georgia, Greece, Hungary, and Slovenia;
  • Our economic risk trend to negative from stable for Australia, Austria, Belgium, Chile, Croatia, Finland, France, India, Indonesia, Ireland, Jamaica, Malta, Netherlands, Peru, Poland, Philippines, Spain, Thailand, Trinidad and Tobago, U.K., U.S., United Arab Emirates, and Uzbekistan;
  • Our industry risk trend to stable from positive for Greece;
  • Our industry risk trend to negative from stable for France, Turkey and United Arab Emirates;
  • Our economic risk trend to negative from stable and our industry risk trend to stable from negative for Italy;
  • Our BICRA to Group ‘5’ from Group ‘4’, our economic risk score to ‘6’ from ‘5’ and our economic risk trend to stable from negative for Mexico;
  • Our BICRA to Group ‘6’ from Group ‘5’, our economic risk score to ‘7’ from ‘6’ for South Africa and India, while maintaining a negative economic risk trend for South Africa;
  • Our BICRA to Group ‘5’ from Group ‘4’, our economic risk trend to negative from stable, our industry risk score to ‘6’ from ‘5’ and our industry risk trend to stable from negative for Iceland;
  • Our BICRA to Group ‘7’ from Group ‘6’, our industry risk score to ‘6’ from ‘5’, our industry risk trend to stable from negative, and our government support assessment to uncertain from supportive for Oman;
  • Our BICRA to Group ‘9’ from Group ‘8’, and our industry risk score to ‘8’ from ‘7’ for Bolivia; and
  • Our BICRA to Group ’10’ from Group ‘9’, our economic risk score to ’10’ from ‘8’, and our economic risk trend to stable from negative for Tunisia.

On Oct. 23, 2020, we republished the article to clarify the BICRA action for South African and India.

Appendix 1: Top 200 Banks

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Issuer Credit Ratings And Component Scores For The Top 200 Banks Globally
Country Institution Opco long-term ICR/outlook Group SACP or SACP
Australia

Australia and New Zealand Banking Group Ltd.

AA-/Negative a

Commonwealth Bank of Australia

AA-/Negative a

Macquarie Bank Ltd.

A+/Negative a-

National Australia Bank Ltd.

AA-/Negative a

Westpac Banking Corp.

AA-/Negative a
Austria

Erste Group Bank AG

A/Stable a

UniCredit Bank Austria AG

BBB+/Negative bbb+

Raiffeisen Bank International AG

A-/Negative a-
Belgium

Belfius Bank SA/NV

A-/Stable a-

KBC Group N.V.§

A+/Stable a
Brazil

Banco Bradesco S.A.

BB-/Stable bbb-

Banco do Brasil S.A

BB-/Stable bbb

Banco Nacional de Desenvolvimento Economico e Social

BB-/Stable bbb-

Caixa Economica Federal

BB-/Stable bb

Itau Unibanco Holding S.A.

BB-/Stable bbb
Canada

Bank of Montreal

A+/Stable a

Canadian Imperial Bank of Commerce

A+/Stable a-

Desjardins Group

A+/Stable a

National Bank of Canada

A/Stable a-

Royal Bank of Canada

AA-/Stable a+

The Bank of Nova Scotia

A+/Stable a

Toronto-Dominion Bank

AA-/Stable a+
China

Agricultural Bank of China Ltd.

A/Stable bbb+

Bank of China Ltd.

A/Stable a-

Bank of Communications Co. Ltd.

A-/Stable bbb-

China CITIC Bank Co. Ltd.

BBB+/Stable bb

China Construction Bank Corp.

A/Stable bbb+

China Guangfa Bank Co. Ltd.

BBB-/Negative bb

China Merchants Bank Co. Ltd.

BBB+/Stable bbb

China Minsheng Banking Corp. Ltd.

BBB-/Stable bb

Hua Xia Bank Co. Ltd.

BBB-/Stable bb

Industrial and Commercial Bank of China Ltd.

A/Stable bbb+

Postal Savings Bank Of China Co. Ltd.

A/Stable bbb

Shanghai Pudong Development Bank Co. Ltd.

BBB/Stable bb

Shanghai Rural Commercial Bank Co. Ltd.

BBB/Stable bb+
Colombia

Bancolombia, S. A. y Companias Subordinadas

BB+/Stable bb+
Denmark

Danske Bank A/S

A/Stable a-

Nykredit Realkredit A/S

A+/Stable a-
Finland

Nordea Bank Abp

AA-/Negative a+

OP Corporate Bank PLC

AA-/Negative a+
France

BNP Paribas

A+/Negative a

BPCE

A+/Negative a

Credit Agricole Group

A+/Negative a

Credit Mutuel Group

A/Negative a

La Banque Postale

A/Stable bbb+

RCI Banque

BBB/Negative bbb-

Societe Generale

A/Negative bbb+
Germany

Commerzbank AG

BBB+/Negative bbb

Cooperative Banking Sector Germany

AA-/Negative aa-

DekaBank Deutsche Girozentrale

A+/Negative bbb

Deutsche Bank AG

BBB+/Negative bbb

S-Finanzgruppe Hessen-Thueringen

A/Negative a

Volkswagen Bank GmbH

A-/Negative a-
Greece

Alpha Bank A.E.

B/Stable b

Eurobank Ergasias S.A

B/Stable b

National Bank of Greece S.A.

B/Stable b

Piraeus Bank S.A.

B-/Stable b-
Hong Kong

The Bank of East Asia Limited

A-/Stable bbb+

The Hongkong and Shanghai Banking Corp. Ltd.

AA-/Stable a+
Hungary

OTP Bank PLC

BBB/Stable bbb
India

Axis Bank Ltd.

BB+/Stable bb+

HDFC Bank Ltd.

BBB-/Stable bbb+

ICICI Bank Ltd.

BBB-/Negative bbb-

Kotak Mahindra Bank

BBB-/Stable bbb-

State Bank of India

BBB-/Stable bbb-
Indonesia

PT Bank Mandiri (Persero)

BBB-/Negative bbb-

PT Bank Negara Indonesia (Persero) Tbk.

BBB-/Negative bbb-

PT Bank Rakyat Indonesia (Persero) Tbk.

BBB-/Negative bbb-
Ireland

AIB Group PLC§

BBB+/Negative bbb

Bank of Ireland Group PLC§

A-/Negative bbb
Israel

Bank Hapoalim B.M.

A/Stable a-

Bank Leumi le-Israel B.M.

A/Stable a-

Israel Discount Bank Ltd.

BBB+/Stable bbb
Italy

Intesa Sanpaolo SpA

BBB/Negative bbb

Mediobanca SpA

BBB/Negative bbb

UBI Banca SpA

BBB/Negative bbb-

UniCredit SpA

BBB/Negative bbb
Japan

Chiba Bank Ltd.

A-/Stable a-

Development Bank of Japan Inc.

A/Stable bbb

Hachijuni Bank Ltd.

A-/Stable a-

Japan Post Bank Co. Ltd.

A/Stable bbb+

Kyushu Financial Group Inc.§*

A-/Negative bbb+

Mitsubishi UFJ Financial Group Inc.§

A/Stable a

Mizuho Financial Group Inc.§

A/Stable a

Nomura Holdings Inc.§

A-/Stable bbb

Norinchukin Bank

A/Negative bbb+

Resona Bank Ltd.

A/Stable bbb+

Shinkin Central Bank

A/Stable bbb+

Shinsei Bank Ltd.

BBB/Stable bbb-

Shizuoka Bank Ltd.

A-/Stable a-

Sumitomo Mitsui Financial Group Inc.§

A/Stable a

Sumitomo Mitsui Trust Bank Ltd.

A/Stable a-
Korea

Industrial Bank of Korea

AA-/Stable bbb+

KEB Hana Bank

A+/Stable a-

Kookmin Bank

A+/Stable a-

Korea Development Bank

AA/Stable bb-

Nonghyup Bank

A+/Stable bbb+

Shinhan Bank

A+/Stable a-

Woori Bank

A/Positive bbb+
Kuwait

National Bank of Kuwait S.A.K.

A/Stable a-
Malaysia

CIMB Bank Bhd.

A-/Negative a-

Malayan Banking Bhd.

A-/Negative a-

Public Bank Bhd.

A-/Negative a
Mexico

Banco Mercantil del Norte S.A. Institucion de Banca Multiple Grupo Financiero Banorte

BBB/Negative bbb+

Banco Nacional de Mexico S.A.

BBB/Negative bbb+

BBVA Bancomer

BBB/Negative bbb+
Netherlands

ABN AMRO Bank N.V.

A/Negative a-

Cooperatieve Rabobank U.A.

A+/Negative a

ING Groep N.V.§

A+/Stable a
Norway

DNB Bank ASA

AA-/Stable a+
Portugal

Banco Comercial Portugues S.A.

BB/Stable bb
Qatar

Qatar Islamic Bank Q.P.S.C.

A-/Stable bbb-

Qatar National Bank (Q.P.S.C.)

A/Stable bbb
Russia

Alfa-Bank JSC

BB+/Stable bb+

Gazprombank JSC

BB+/Stable bb-

VTB Bank JSC

BBB-/Stable bb-
Saudi Arabia

Al Rajhi Bank

BBB+/Stable bbb+

Arab National Bank

BBB+/Stable bbb

Banque Saudi Fransi

BBB+/Stable bbb

Riyad Bank

BBB+/Stable bbb+

Samba Financial Group

BBB+/Stable bbb+

The National Commercial Bank

BBB+/Stable bbb+
Singapore

DBS Bank Ltd.

AA-/Stable a

Oversea-Chinese Banking Corp. Ltd.

AA-/Stable a

United Overseas Bank Ltd.

AA-/Stable a
South Africa

FirstRand Bank Ltd.

BB-/Stable bbb-

Nedbank Ltd.

BB-/Stable bbb-
Spain

Banco Bilbao Vizcaya Argentaria S.A.

A-/Negative a-

Banco de Sabadell S.A.

BBB/Negative bbb

Banco Santander S.A.

A/Negative a

BFA Tenedora de Acciones, S.A.U.§

BBB/Watch Pos bbb

CaixaBank S.A.

BBB+/Stable bbb+

Kutxabank S.A.

BBB/Stable bbb
Sweden

Skandinaviska Enskilda Banken AB (publ)

A+/Stable a

Svenska Handelsbanken AB

AA-/Stable a+

Swedbank AB

A+/Stable a
Switzerland

Credit Suisse Group AG§

A+/Stable a-

PostFinance AG

AA+/Stable a+

Raiffeisen Schweiz Genossenschaft

A+/Stable a+

UBS Group AG§

A+/Stable a

Zuercher Kantonalbank

AAA/Stable aa-
Taiwan

Bank of Taiwan

A+/Stable a-

Cathay United Bank Co. Ltd.

A-/Stable bbb+

Chang Hwa Commercial Bank Ltd.

A-/Stable bbb+

CTBC Bank Co. Ltd.

A/Stable a-

E.SUN Commercial Bank Ltd.

A-/Stable bbb+

First Commercial Bank Ltd.

A-/Stable bbb+

Hua Nan Commercial Bank Ltd.

A-/Stable bbb+

Land Bank of Taiwan

A-/Stable bbb

Mega International Commercial Bank Co. Ltd.

A/Stable a-

Taipei Fubon Commercial Bank Co. Ltd.

A-/Stable bbb+

Taiwan Cooperative Bank Ltd.

A/Stable bbb+

The Shanghai Commercial & Savings Bank Ltd.

BBB+/Stable bbb+
Thailand

Bangkok Bank Public Co. Ltd.

BBB+/Stable bbb

Bank of Ayudhya Public Co. Ltd.

BBB+/Stable bb+

KASIKORNBANK PCL

BBB+/Stable bbb-

Krung Thai Bank Public Co. Ltd.

BBB/Stable bb+

Siam Commercial Bank Public Co. Ltd.

BBB+/Stable bbb-

TMB Bank Public Co. Ltd.

BBB-/Positive bb+
Turkey

Turkiye Is Bankasi AS

B+/Negative b+
United Kingdom

Barclays PLC§

A/Negative bbb+

HSBC Holdings PLC§

A+/Stable a

Lloyds Banking Group PLC§

A+/Negative a-

Nationwide Building Society

A/Stable a-

Santander UK Group Holdings PLC§

A/Negative bbb+

Standard Chartered PLC§

A/Stable a-

NatWest Group plc§

A/Negative bbb+
United States

Ally Financial Inc.

BBB-/Negative† bbb

American Express Co.§

A-/Stable a-

Bank of America Corp.§

A+/Stable a

Bank of New York Mellon Corp.§

AA-/Stable a+

Bank of the West

A/Negative bbb+

Capital One Financial Corp.§

BBB+/Negative bbb+

CIT Group Inc.§

BBB-/Watch Pos bbb-

Citigroup Inc.§

A+/Stable a-

Citizens Financial Group, Inc.§

A-/Stable a-

Comerica Inc.§

A-/Negative a-

Discover Financial Services§

BBB/Negative bbb

Fifth Third Bancorp§

A-/Stable a-

First Republic Bank

A-/Stable a-

Huntington Bancshares Inc.§

A-/Stable a-

JPMorgan Chase & Co.§

A+/Stable a

KeyCorp§

A-/Stable a-

M&T Bank Corp.§

A/Negative a

Morgan Stanley§

A+/Stable a-

MUFG Americas Holdings Corporation§

A/Stable a-

Northern Trust Corp.§

AA-/Stable aa-

PNC Financial Services Group, Inc. (The)§

A/Stable a

Regions Financial Corp.§

A-/Stable a-

State Street Corp.§

AA-/Stable a+

SVB Financial Group§

BBB+/Stable bbb+

Synchrony Financial§

BBB/Negative bbb

The Goldman Sachs Group Inc.§

A+/Stable bbb+

Truist Financial Corp.§

A/Stable a

U.S. Bancorp§

AA-/Stable a+

Wells Fargo & Co.§

A+/Stable a-

Zions Bancorporation

BBB+/Negative bbb+
United Arab Emirates

Abu Dhabi Commercial Bank

A/Negative bbb+

First Abu Dhabi Bank

AA-/Negative a-

Mashreqbank

A-/Negative bbb

Appendix 2: COVID-19 And Oil-Shock-Related Bank Rating Actions As Of Oct. 22, 2020

APAC

EMEA

U.S.-CANADA

Latin America

Related Research

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