Bulletin: Robust Earnings And Balance Sheets Keep The U.K. Banking Industry In BICRA Group 3 Despite Deepening Economic Woes

LONDON (S&P Global Ratings) Oct. 25, 2022--The U.K. is facing material challenges to its economic and political stability, which we believe will exceed those faced by many European and global peers. We expect the country's banks will maintain healthy profitability, though, buoyed by robust balance sheets and stable capital and funding bases. We believe that these strengths should enable U.K. banks and their ratings to absorb growing economic instability, so we are maintaining our U.K. Banking Industry Country Risk Assessment (BICRA) at '3'. The scores for economic and industry risk also remain unchanged, as do the stable trends for both economic and industry risk (see table below). Although many issues affecting the U.K. are common among European and global peers--not

...LONDON (S&P Global Ratings) Oct. 25, 2022--The U.K. is facing material challenges to its economic and political stability, which we believe will exceed those faced by many European and global peers. We expect the country's banks will maintain healthy profitability, though, buoyed by robust balance sheets and stable capital and funding bases. We believe that these strengths should enable U.K. banks and their ratings to absorb growing economic instability, so we are maintaining our U.K. Banking Industry Country Risk Assessment (BICRA) at '3'. The scores for economic and industry risk also remain unchanged, as do the stable trends for both economic and industry risk (see table below). We believe that the U.K. economy is entering an economic correction and faces a host of idiosyncratic risks. GDP contracted in August and consumer and business confidence have been on a downward trend throughout 2022. In our base-case forecast, we consider that the economy has moved into a four-quarter recession,...

Bulletin