Fitch Ratings' new interactive country-by-country map of bank rating trends shows that the balance of Outlooks globally has turned sharply negative since the onset of the coronavirus pandemic. The proportion of bank ratings on Negative Outlook or Rating Watch Negative (RWN) shot up to over 60% at end-1H20 from 13% at end-2019. The proportion on RWN was 10%, the highest in recent years, reflecting near-term risks to many banks' ratings. There were virtually no ratings on Positive Outlook or Rating Watch Positive.

The Outlook balance was most Negative in emerging markets in the Americas, with 87% of ratings on Negative Outlook or RWN, reflecting the already high proportion of Negative Outlooks at end-2019 (31%), and rating actions in 1H20 to reflect deteriorating operating environments and sovereign rating actions. Outside Latin America, the proportion of Negative Outlooks/Watches was lower in emerging markets (54%) than in developed markets (73%), as a higher proportion of ratings in emerging markets are driven by sovereign or institutional support.

European developed markets had the second-highest proportion of Negative Outlooks/Watches and the greatest increase in 1H20. This reflects pre-crisis profitability challenges, which are likely to be exacerbated by the economic fallout from the pandemic. European developed markets also had by far the highest proportion of banks on RWN (22%). This is largely due to the fact that many of these banks entered the crisis with limited headroom at their rating level.

Emerging markets in Asia-Pacific and Europe had the lowest proportions of banks on Negative Outlook/Watch (27% and 44%, respectively). This reflects the greater prevalence of ratings driven by external support - mostly sovereign support in the case of Asia-Pacific banks and institutional support from higher-rated parents in the case of European emerging market banks. In most of these cases, our view of the external support that would be forthcoming, if needed, has remained unchanged.

Globally, there were 109 bank downgrades and nine upgrades in 1H20. Downgrades were concentrated in emerging markets in the Americas (34), European developed markets (25) and the Middle East and Africa (21). Upgrades largely reflected rating criteria changes.