Banks’ outlooks steady despite geopolitical risks and possible tariff shocks

These lenders have “satisfactorily contended” with stressful conditions over the past five years.

Banks globally are expected to remain steady despite possible disruptions to the financial markets, including geopolitical risks and tariff shocks.

About 85% of banks rated by S&P Global Ratings are on a stable outlook, the ratings agency said.

"Banks are operating in volatile times," said S&P Global Ratings credit analyst Emmanuel Volland, "when significant policy decisions and regional conflicts could disrupt financial markets and rapidly change the economic environment."

Downside risks include an escalation of geopolitical risks, including those in Ukraine and in the Middle East, as well as a stronger-than-anticipated spillover from tariff shocks to the real economy and financial markets.

Banks have, overall, satisfactorily contended with stressful operating conditions and events over the past five years, S&P noted.

"These evolving risks will challenge business models and risk management for some banks and offer opportunities for others," said Volland.

Credit divergence is expected to increase eventually, he added.

"We expect credit divergence to increase eventually," Volland said. "Meanwhile, solid bank financial metrics— including asset quality, profitability, and funding— and favorable market conditions remain consistent tailwinds."