GLOBAL BANK GLOOM-Banks across the world are in for a bumpy 2024 -Moody’s: Rating agency Moody’s has issued a negative outlook for the global banking sector in 2024, citing slower growth, rising default risk, and weaker financial performance.

#1- Slower growth: Growth will slow down as interest rates stay high “even as major central banks begin to cut rates.” This will limit business prospects and therefore limit loan growth across banks’ portfolios, which will prevent them from reaping the benefits of higher rates. “Elevated rates for the most part will lead to higher funding costs and greater asset risks among existing borrowers.”

#2- Bad loans: Financial conditions will reduce borrowers’ liquidity and income, making them unable to meet loan payments. That paired with higher debt-servicing costs will deteriorate loan performance among banks.

#3- Weaker profits: Moody’s believes that banks’ “profitability gains from the last two years will likely start to subside but remain sound,” citing higher funding costs and weaker loan demand due to heightened rates.

The news got attention from: Reuters and the Financial Times.

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