Government stimulus has provided a security net for U.S. banks over the last few volatile months, though a new Fitch Ratings report says the remainder of the year will be important for the sector due to potential aftershocks of the coronavirus pandemic.

"Favorable U.S. bank delinquency trends in the second quarter are masking downside risks for the industry," said Group Credit Offier Julie Solar. Among the risks that Fitch has identified include the potential fallout when government aid ultimately runs out, and repeated surges in new infections rates that could lead to targeted shutdowns and a lackluster economic recovery.

Banks with greater exposure to the U.S. consumer are potentially more vulnerable to these downside risks. 'Banks have typically offered forbearance to consumer and commercial borrowers for up to 90 days, which could be extended beyond the initial forbearance period,' said Solar. 'Another thing to consider is the return to school this fall as widespread unplanned school closures could add unforeseen challenges for some households.'

These aftershocks could very well extend into the colder late fall and winter months. Potential longer-term headwinds include a resurgence in coronavirus infections when the seasonal flu is in full swing. Further, certain cooler climates may not benefit from outdoor dining and other activities that will need to be curtailed when the colder months come.

Fitch's sector and Rating Outlook for U.S. banks remains Negative. Approximately 70% of Fitch-rated banks either have a Negative Outlook or are on Rating Watch Negative. Rating actions taken to date reflect the downside risks to banks' asset quality, earnings, and capitalization, but also the massive relief measures and stimulus from central banks and policy makers.