Global banks are expected to maintain a stable outlook in 2026, according to Moody’s Ratings’ Global Banks 2026 Outlook. The report indicates that steady but subdued global economic growth, lower policy rates, and strong capital and liquidity buffers will support the sector’s creditworthiness as the credit cycle matures.
Moody’s analysis highlights that resilient asset quality, solid funding profiles, and sustained profitability are key factors underpinning bank stability. However, the operating environment is becoming more complex due to lower interest rates compressing net interest margins, increased competition from private credit providers, and the impact of artificial intelligence (AI) and digital assets on financial services delivery.
“Global growth will remain steady but modest in 2026, providing a broadly supportive backdrop for banks. Lower policy rates in many regions will help sustain credit demand and support borrowers, even as the cycle moves into a mature phase. However, the operating environment will stay vulnerable to geopolitical risk, trade tensions and a rapidly changing financial landscape. These factors will keep tail risks elevated for the global banking sector, particularly for banks with concentrated exposures or weaker risk management,” according to Moody’s Ratings.
The report notes that further rate cuts by central banks are expected to ease debt-servicing burdens for households and businesses. This should help keep loan performance generally stable and limit credit losses across most major banking systems. Asset quality is projected to remain resilient overall, with only slight increases in problem loans where growth is weaker or specific sectors face stress.
Capital ratios at global banks are near peak levels after several years of improved profitability and disciplined balance sheet management. Loan growth is likely to stay contained in 2026, helping maintain high capital ratios. Regulators—particularly in the United States—may reduce some local regulatory requirements related to Basel rules, which could slightly ease capital requirements for some institutions.
“Global banks enter 2026 with strong capital buffers following several years of improved profitability and disciplined balance sheet growth. Loan growth is likely to remain contained, which will help sustain high capital ratios and support ongoing credit creation. At the same time, regulators in some jurisdictions, led by the US, are likely to reduce ‘gold-plating’ of Basel rules and local regulations, easing capital requirements at the margin. This combination of robust capitalisation and gradually more proportionate regulation will support both credit strength and shareholder distributions, including dividends and share buybacks,” Moody’s Ratings stated.
Despite pressures on net interest margins from lower rates—especially for banks dependent on deposit funding—overall profitability is expected to be broadly stable. Many institutions are adapting by repricing deposits or expanding fee-based business lines such as payment services or wealth management. Efficiency gains through AI adoption also contribute positively.
“Lower interest rates will weigh on net interest margins… Margin compression will be a key profitability challenge in 2026. However, many banks are responding by repricing deposits, expanding higher-value fee and commission businesses… Growth in payment services, wealth management… alongside careful cost control and AI-enabled efficiency gains, will help keep overall profitability solid for most rated banks,” according to Moody’s Ratings.
Liquidity buffers should remain strong next year as deposit recovery continues amid less competition from higher-yielding securities markets. Governments’ willingness to provide crisis support remains unchanged but may be limited by fiscal constraints in certain countries.
Structural changes driven by technology are accelerating within banking operations worldwide. “AI is being deployed across risk management… improving efficiency but also introducing new operational and cyber risks.” The expansion of private credit provides alternative financing options for companies while increasing competitive pressure on traditional lenders; meanwhile digital assets require updates to technology infrastructure and risk controls.
The full Global Banks 2026 Outlook offers detailed scenario analysis along with regional comparisons regarding these trends.
