New Delhi, Nov 13: Global banks have a steady outlook in 2026 amid increasing political uncertainties, a report said on Thursday, adding that structural improvements and good economic prospects keep India’s financial institutions resilient.
“India’s infrastructure spending and private consumption will support robust economic growth. We see good prospects for the economy over the next couple of years. India’s low US trade exposure reduces tariff risks,” according to the report from S&P Global Ratings.
“Banks are operating in volatile times when significant policy decisions and regional conflicts could disrupt financial markets and rapidly change the economic environment,” said S&P Global Ratings credit analyst, Emmanuel Volland, regarding the global banking landscape.
Regarding the Indian financial landscape, the firm said that even though stress pockets have emerged in unsecured personal loans and microfinance loans, the underwriting standards for secured retail loans are healthy, and delinquencies in this segment remain manageable.
It forecasted global banks’ credit losses to increase to $655 billion in 2026, up 7.5 per cent on-year, before the rise in losses slowing in 2027.
The bulk of the incremental loss is expected in Asia‑Pacific, driven by tariff-related uncertainties on lending to China’s micro and small enterprises and its unsecured consumer credit segment.
“We see these losses as manageable for banks, thanks to generally solid profitability and strengthened prudential rules implemented over the past years,” the report said.
S&P Global Ratings identified four downside risks to global bank ratings, such as escalation of geopolitical risks, stronger‑than‑anticipated spillovers from tariff shocks, weakening regulatory environments and evolving risks linked to digitalisation, Gen AI and climate change.
“We expect credit divergence to increase eventually,” Volland said, adding that solid bank financial metrics — including asset quality, profitability and favourable market conditions remain consistent tailwinds.
–IANS