Moody's Downgrade Chartbook

Ratings agency Moody's cut the credit ratings of 10 small and midsized banks late Monday, while placing six big lenders on notice for a future downgrade, citing profitability challenges and funding risks. You can find my macro thoughts on the matter in Tuesdays note ( here ).

The key takeaways from the report are summerised below:

• Ratings agency Moody's cut the credit ratings of 10 smaller regional and midsized banks late Monday, and assigned a negative outlook for six big lenders.

• The agency cited higher funding costs, profitability pressures, and slowing loan growth as a common theme in banks' second-quarter earnings, and said the Fed's rate hikes will lower profitability as consumers take out fewer loans.

• Among the bigger banks, Moody's reasons for assigning a negative outlook varied by lender. Some, including U.S. Bancorp and Truist Financial, have low capital buffers, while others, including State Street and BNY Mellon, have experienced large deposit outflows.

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