Outlook dim for U.S. banks in 2012: S&P
Dec. 15, 2011
CHICAGO (MarketWatch) -- The forecast is gloomy for U.S. banks in 2012, according to the latest report from Standard & Poor's, issued on Thursday. "Credible factors that can spur meaningful economic expansion in 2012 have diminished, even as the Fed has stated that the economy has been expanding moderately so far in the fourth quarter of 2011. While domestic risks may have diminished somewhat, the bigger question is how much the world economy will slow down," commented Standard & Poor's credit analyst Rodrigo Quintanilla, in a statement. The ratings agency said decreased worldwide demand will probably diminish credit growth, and "ongoing regulatory constraints may weaken margins," hampering revenue growth for U.S. banks during the year. The institutions will be weakened by other factors, including moves by American corporations and households to get rid of debt, slowing trade flows, and extremely low interest rates. "Meanwhile, contagion from Europe's sovereign debt crisis remains a major concern," the firm said. Analyst Quintanilla stated that U.S. banks are dealing with the "greatest structural change since the Great Depression."