S&P Global Ratings’ view on the global banking sector remains stable, with broad ratings stability expected through 2026.
As emerges from the very recent Global Banks Outlook 2026, as of 31 October 2025, 85% of the banks assessed by S&P had a stable outlook. “This stability is also reflected in our Banking Sector Country Risk Assessments (BICRAs) across the 88 banking systems we assess globally. As of end-October, 89% of our BICRAs indicated stable trends for economic risk and banking systems sector risk,” the analysts highlight.
Banks, S&P reminds us, operate in a period of volatility, in which “significant political decisions and regional conflicts could disrupt financial markets and rapidly change the economic environment”.
And while analysts predict that “the banking sector will adapt well to any second-order impacts from rising global trade tariffs and regional conflicts,” the “risks to our baseline remain tilted to the downside.”
The main downside risks to bank ratings
S&P believes there are four main downside risks to the global banking sector.
First of all, “the escalation of geopolitical risks”, such as the war between Russia and Ukraine and the conflicts in the Middle East; secondly, a “stronger than expected impact of tariff shocks on the real economy and financial markets”.
Added to this is the risk of “a weakening of the banking regulatory environment that would limit the effectiveness of supervisory action or weaker global coordination in times of stress; or risks that continue to migrate from the banking system to non-banking actors”.
Finally, evolving risks, including new technologies (such as generative artificial intelligence), digitalization, cybersecurity and climate change, which “could broaden credit differentiation, as adaptation to such changes could be positive or negative.”
S&P expects “credit divergence to increase over time. Meanwhile, strong bank financial metrics, including asset quality, profitability and funding, and favorable market conditions remain drivers.”
The Italian context
According to S&P, economic conditions could improve slightly in 2026. “We expect Italy’s GDP to grow by 0.8% in both 2026 and 2027, supported by the effect of EU-funded public investment spending. Together with the strength of the labor and business markets, this should support the resilience of the private sector’s creditworthiness. The negative impact of US tariffs and global trade uncertainty are the main risks.”
Banks’ ability to generate profits should remain solid, analysts highlighted, predicting that “return on equity (ROE) is likely to remain higher than the cost of equity capital. Reducing fragmentation, the dominance of larger institutions and more agile business models will contribute to this result. Revenue diversification and cost efficiencies will help banks offset the likely further decline in net interest margin in 2026, as happened in 2025”.
