Moody's slashes ratings for 10 US banks, signals potential downgrades for others

Moody's, the ratings agency, took a step to lower the credit ratings of several prominent US banks on Monday and issued a cautionary note, indicating that it was assessing the status of some of the nation's major financial institutions.

Moody's reduced the credit ratings of 10 US banks by a single level and initiated a review of some leading banking entities for potential downgrades. The agency also shifted its perspective to negative for a number of significant lenders, ultimately revising assessments for 27 banks within the sector.

Among the banks that experienced credit rating reductions were M&T Bank, Pinnacle Financial Partners, Prosperity Bank, and BOK Financial Corp.

The banks currently under review for potential downgrade encompass BNY Mellon, US Bancorp, State Street, and Truist Financial.

Q2 results show growing profitability pressures

Moody's elaborated in a note that "Many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital."

"This comes as a mild recession looms," and banks contend with greater risks from interest rates and managing their assets and liabilities, the ratings agency said.

The earlier collapses of Silicon Valley Bank and Signature Bank this year triggered a crisis of confidence within the USF banking sector. This led to a surgṣe in deposit withdrawals from various regional banks, despite authorities introducing emergency measures to restore faith in the system.

Moody's adjusted its perspective from stable to negative for Capital One, Citizens Financial, Fifth Third Bancorp, and others.

Furthermore, the ratings agency reaffirmed the existing ratings for PNC Financial Services Group, Citizens, Huntington Bancshares, and other financial institutions.

(With Reuters inputs)