DBRS Morningstar Publishes Commentary on “DBRS Morningstar: U.S. Banks 2020 Outlook: Steady Sailing, Despite Rising Concerns”

DBRS, Inc. (DBRS Morningstar) published a commentary highlighting the 2020 outlook for U.S. Banks. Even as the economic expansion has surpassed a decade in length and headwinds including low interest rates and a flat yield curve persist, DBRS Morningstar’s expectation for continued, albeit slowing economic growth support a generally favorable outlook.

Key highlights include:

-- The outlook for U.S. banks generally remains favorable, given DBRS Morningstar’s expectation for continued, albeit slowing economic growth.
-- DBRS Morningstar expects similar results from U.S. banks in 2020.
-- Given the stage of the credit cycle and slower growth outlook, positive ratings actions will likely be limited. At present, 90% of DBRS Morningstar-rated banks have Stable trends, with the balance having Positive trends.

“U.S. banks continued to perform well in 2019, despite pressured net interest margins resulting from the three Federal Reserve interest rate cuts during the year. DBRS Morningstar expects similar results in 2020. While a lower interest rate environment and a flat yield curve are a head wind to bank revenue, DBRS Morningstar generally does not expect the earnings power of large U.S. banks to be adversely impacted, considering their diversified business models. Additionally, capital markets-related results should continue to be solid, given that the U.S. capital markets peer group has further consolidated its market shares at the top of the global capital markets league table,” said Michael McTamney, Vice President – Global FIG.

This commentary is available at www.dbrs.com.

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