Investing.com - A week after Fitch downgraded the US long-term debt rating, Moody's (NYSE:MCO) has once again given the US a 'slap on the wrist'. Specifically, to its banks.
The agency has downgraded the credit ratings of 10 small and medium-sized US banks and said it may downgrade major lenders, including U.S. Bancorp, Bank of New York Mellon (NYSE:BK) Corp, State Street Corp (NYSE:STT) and Truist Financial Corp (NYSE:TFC).
Higher funding costs, potential regulatory capital weaknesses, and rising risks linked to commercial real estate lending amid weakening demand for office space are among the stresses driving the review, Moody's explained in a series of notes picked up by Bloomberg.
"Taken together, all of these factors have lowered the credit profiles of several US banks, though not all banks equally," the agency said.
The companies that were downgraded included M&T Bank Corp (NYSE:MTB), Webster Financial Corporation (NYSE:WBS), BOK Financial Corporation (NASDAQ: BOKF), Old National Bancorp (NASDAQ:ONB), Pinnacle Financial Partners Inc (NASDAQ:PNFP) and Fulton Financial Corporation (NASDAQ:FULT).
Northern Trust Corporation (NASDAQ:NTRS) and Cullen/Frost Bankers Inc (NYSE:CFR) are also under review for downgrades.
And Moody's adopted a "negative" outlook for 11 lenders, including PNC Financial Services Group (NYSE:PNC), Capital One Financial Corp (NYSE:COF), Citizens Financial Group Inc (NYSE: CFG), Fifth Third Bancorp (NASDAQ:FITB), Regions Financial Corp (NYSE:RF), Ally Financial Inc (NYSE:ALLY), Bank Ozk (NASDAQ:OZK) and Huntington Bancshares Incorporated (NASDAQ:HBAN).
Investors, unnerved by the collapse of regional banks in California and New York this year, have been watching closely for signs of stress in the industry as rising interest rates force companies to pay more for deposits and increase the cost of funding from alternative sources, Yahoo Finance reports.
According to Moody's, some banks have slowed loan growth, which preserves capital but also slows the shift in their loan mix towards higher-yielding assets.
(Translated by DeepL)