...Capital and Liquidity Lend Support to Outlook: Fitch Ratings' sector outlook heading into 2015 is stable, underpinned by the strength of the capital and liquidity profiles of U.S. banks, partially offset by expectations of continuing challenges to earnings growth and likely deterioration from low levels of loan losses. This also assumes that the economic environment does not deteriorate meaningfully, and there is no unexpected rapid rise in rates. Core Earnings Growth a Challenge: Bank earnings will likely be under pressure given further margin compression, elevated legal costs, continuing increases in regulatory-related costs, and higher technological spending. Litigation-related charges have been particularly painful on the earnings of the largest U.S. banks, though they have been manageable in the context of capital. Reserve releases that have aided bank profitability measures are also coming to an end. Capital Generation Expected in 2015: Capital ratios continue to build across the...
