About 80% of global banking groups have stable rating outlooks.

Global banks are projected to maintain stable ratings through 2025, aided by easing inflation that could relieve pressures on struggling sectors, particularly commercial real estate, said S&P Global Ratings. 

Whilst lower inflation will benefit borrowers, it may not significantly boost banks’ credit standings, the report “Global Banks Country-By-Country Outlook 2025: Cautiously Confident” said.

Interest rates, now declining in many regions, are expected to eventually enhance banks’ asset quality, though impacts will vary by geography and take time to materialise. 

According to S&P, about 80% of global banking groups have stable rating outlooks, a trend likely to persist next year. 

Rating improvements, however, are anticipated to stem from country- and bank-specific factors rather than broader macroeconomic shifts.

Credit costs, representing loan-loss provisions, are expected to climb, with global credit losses forecast to grow by 7% to $850b in 2025. 

This projection reflects the impact of recent years’ steep interest rate hikes, which have strained borrowers. These higher credit losses remain within the current rating expectations for most banks.

S&P analysts, including Gavin Gunning and Emmanuel Volland, highlight that banks have successfully navigated challenging conditions over the past five years, reinforcing confidence in their rating resilience. 

However, S&P identifies key risks to bank ratings: potential global economic downturns, worsened property market issues, persistently high interest rates amid substantial government and corporate debt, and new risks like AI, climate change, and cybersecurity, which could increase credit differentiation.