Madrid, December 7 (EFECOM).- Banks are looking into 2026 from a solid position that will continue into next year, a year in which their profitability is expected to remain stable against the backdrop of lower interest rates in many parts of the world and in which geopolitical risks, market volatility and cyber threats will persist.
Both the rating agency Moody’s in a recent study and the European Banking Authority (EBA) in its latest risk assessment report, in which it analyzed 119 banks from 25 countries, agree that they predict stable profitability after reaching historically high levels in Europe in 2025.
Moody’s notes that its global banking outlook is stable in 2026 and that its profitability is likely to remain solid. In his opinion, although the expected lower interest rates will reduce margins, the increasing commission income will compensate for this.
In this sense, it is noted that the increase in commissions and fees of banks, which increased profitability in 2025, will continue in 2026 and operating costs will increase due to investments in information technologies and artificial intelligence (AI).
In the case of European banks, Moody’s expects profitability to weaken slightly due to declines in margins and operating costs after they posted returns above their cost of capital in 2025 for the first time in the last decade.
At the global level, the solid capitalization of the banking sector is forecast to boost loan growth and profit distribution to shareholders, although lending will remain limited in most advanced economies due to moderate economic growth.
It also expects bank deposit growth to continue to recover in 2026 after increasing in 2025, saying it will outpace loan growth in most banking systems.
A decline in loan default rates is also forecast. In its base case, it forecasts global default rates, currently at 4.4% per year, to fall to 2.6% by October 2026, well below the last decade average of 4%.
Moody’s expects bad debts to remain limited on average globally, although they will increase in the Asia-Pacific region.
In addition, banks are generally expected to maintain stable liquidity reserves as many companies in this country have reduced their reliance on uninsured deposits and improved their liquidity following the events that impacted U.S. regional banking in 2023.
Moody’s believes it is likely that banks’ capital ratios have reached all-time highs, noting that U.S.-led regulators could reduce overregulation of the Basel standards and lower capital requirements that were tightened in the wake of the 2008 financial crisis.
However, she points out that the European Central Bank (ECB) will maintain capital levels in the European banking system, although it expects that some large banks will increase profitability for their shareholders by using their excess capital for share buybacks and paying dividends.
Moody’s expects the economic growth expected in 2026 to provide a stable operating environment for banks, although not free from vulnerable geopolitical risks, trade tensions or derivatives of the evolving financial landscape.
In this sense, the EBA points out that trade tensions and the increase in public debt increase risks, leading to higher risk premiums on government bonds and more volatile financing markets.
Furthermore, he explains that European banks remain very vulnerable to external shocks.
It also noted that operational risks for banks remain high due to cyber threats, fraud and legal risks.
The EBA believes that the growing interest in stablecoins could have an impact on banks’ financing and long-term liquidity risk management. EFECOM
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