DBRS Morningstar: Outlook for North American Financial Institutions Brightens

DBRS, Inc. (DBRS Morningstar) published a commentary analyzing the 2021 outlook for North American Financial Institutions.

Key highlights include:

-- DBRS Morningstar expects North American Financial Institutions ratings to remain largely Stable in 2021, while we revert many of the Negative trends put on at the outset of the Coronavirus Disease (COVID-19) pandemic back to Stable. There will be downgrades, but they will be limited.
-- The coronavirus pandemic did not result in a typical downturn. Indeed, despite a massive economic shock, the extent of which was unprecedented, stock markets are at all-time highs, and housing prices continue to move higher as well. In addition, the debt markets have been wide open across the risk spectrum resulting in record issuance and allowing even weaker companies to bolster liquidity.
-- Longer term, the material accumulation of debt at all levels (governments, corporations and consumers) has reduced financial flexibility to cope with the next economic shock, but most financial institutions should continue to have strong capital and liquidity buffers to manage through adverse economic cycles.

“Despite many positive factors, there is still considerable uncertainty with the outlook. With the markets at record highs, it may not take much bad news to spark a significant correction, pressuring wealth and confidence,” said Michael Driscoll, Managing Director – Head of North American FIG.

Notes:
The commentary is available at www.dbrsmorningstar.com.

For more information, visit www.dbrsmorningstar.com or contact us at [email protected].

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