articles Ratings /ratings/en/research/articles/230523-u-s-banks-webinar-discusses-navigating-challenging-conditions-12741397 content esgSubNav
In This List

U.S. Banks Webinar Discusses Navigating Challenging Conditions


Bank of New Zealand Perpetual Preference Shares Rated 'BBB'


India Banks' Strong Performance Set To Continue


Sector And Industry Variables Published For Banking Industry Country Risk Assessment Update For May 2023


EMEA Financial Institutions Monitor 2Q2023: Steering Through Volatility

U.S. Banks Webinar Discusses Navigating Challenging Conditions

NEW YORK (S&P Global Ratings) May 23, 2023--S&P Global Ratings' banks team hosted a webinar today to discuss its updated views following first-quarter results and challenging industry conditions. The webcast slides can be found in "U.S. Banks Webinar Q1 2023: Navigating Choppy Waters."

U.S. bank ratings remain largely on stable outlooks with 86% listed as stable as of May 22. Analysts noted that the heightened volatility related to the bank failures of SVB Financial and First Republic Bank in March 2023 are a reminder of the industry's confidence sensitivity. As a result, the industry risk in the U.S. banking sector has shifted to stable from positive.

Banking industry expectations ranged from the presenters expecting net interest income to likely tick down each quarter as deposit and funding costs increase, to delinquencies and charge-offs rising with a shallow recession, and deposits continuing to fall.

"Funding ratios should worsen from historically strong levels as deposits decline in response to the rise in rates and quantitative tightening," said Devi Aurora, senior director and analytical manager with S&P Global Ratings, adding that "Deposit betas are an area we are watching closely."

There was a significant drop in deposits for smaller banks during March following the SVB failure. Since then, there has been more stability, and so far there has not been an acceleration of deposits from little to big banks.

Most large banks increased their capital ratios in the first quarter through earnings retention and with improved valuations of their available-for-sale (AFS) securities. Presenters noted that the upcoming June Fed stress test results will be an important driver of capital planning for the large banks, as well as the Fed's finalization of the Basel 3 standards.

Loan growth is likely to slow in 2023 after last year's robust pace, and credit provisions are likely to trend higher amid the uncertain economy. Presenters said loan growth will likely decelerate meaningfully this year toward roughly 2% as economic activity likely slows.

In terms of some of the key risks and trends, lending standards across most loan types have tightened amid a softening economy, and provisions will be an important component to how banks fare in 2023. S&P Global Ratings' base-case scenario in its forecast incorporates 2% loan growth, charge-offs of 40 basis points, and a 1.8% allowance to loans by year-end, up from 1.66% in the first quarter.

S&P Global economists continue to expect a short and shallow recession as their base case, centered mainly around the middle half and increasingly toward the second half, and core inflation to persist around the 4.7% range in 2023.

During a webcast poll on scenarios most likely within the next year, 71% of the participants said they think rates will remain around the current levels, but the economy grows slowly or enters a shallow recession, while 11% voted that a significant recession could be on the horizon.

"Again, what is going to be critical for us in our evaluation and assessment of bank ratings is the depth and duration of a downside scenario and evaluating the risk that rates rising will tip the economy into a significant recession that is negative for banking," said Ms. Aurora.

This report does not constitute a rating action.

The report is available to subscribers of RatingsDirect at If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at Members of the media may request a copy of this report by contacting the media representative provided.

Primary Credit Analysts:Devi Aurora, New York + 1 (212) 438 3055;
Brendan Browne, CFA, New York + 1 (212) 438 7399;
E.Robert Hansen, CFA, New York + 1 (212) 438 7402;
Stuart Plesser, New York + 1 (212) 438 6870;
Media Contact:Jeff Sexton, New York + 1 (212) 438 3448;

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back