Fitch Ratings' sector outlook report on banks, insurance companies and non-bank financial institutions stated that the outlook for the banking sector in 2024 is "neutral" for the majority of developed and emerging markets.
Higher interest rates are expected to have a moderate impact on earnings and asset quality for most sectors, while the outlook for US banks continues to deteriorate, reflecting weak economic growth and labor market pressures.
The organization also stated that interest rates, which are expected to remain "higher for longer", continue to put pressure on liquidity and margins.
"CHINESE BANKING SECTOR DETERIORATED"
The report said that the sector outlook has deteriorated in China, where some policy measures to support the economy have put pressure on the growth and profitability of the system, and that the biggest pressure will be on smaller banks.
Improving sector outlooks were highlighted in South and South East Asia, where relatively robust economic growth will support loan demand, the report said, adding that the outlook for the global insurance sector was neutral, with the outlook for the retail insurance sector improving as insurers adjust to the very sharp rise in interest rates and inflation.
