FINANCIAL INSTITUTIONSSECTOR IN-DEPTH 5 OCTOBER 2015TABLE OF CONTENTSUnperturbed: Market Signals for Banks Were Mostly Steady in September 1 Market-implied ratings tables for global banking regions and companies3Monthly Bank Risk Report: key credit metrics: CDS, bonds 4 Appendix : Moodys Capital Markets Research recent publications on the finance sector17ANALYST CONTACTSAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Bank Risk ReportUnperturbed: Market Signals for Banks Were Mostly Steady in September By Allerton (Tony) SmithAgainst the backdrop of market volatility in September, bank credit spreads provided a calmer oasis. The majority of banking regions around the globe did not experience a shift in either bond-implied ratings or CDS-implied ratings in the month. There do not appear to be many major looming problems for most banks around the globe. Asset quality measures are not deteriorating, interest spreads are mostly stable (and unfortunately likely to remain too thin by historic standards), and liquidity and capital metrics are benign. Our expectation for most regions is stability in market signals as third-quarter financial results are announced over the next several weeks.One notable exception is Turkey. Turkish banks may need to reduce lending in 2016, as the sources required to fund their loan books become increasingly scarce. Worsening foreign investor sentiment toward Turkey is likely to raise the cost of international funding at a time when profitability is declining. This follows a widening of the gap between domestic deposit growth and credit expansion since 2010, which caused Turkish banks to increasingly borrow from capital markets.Advances in market signals will likely remain constrained for European investment banks as historic issue...
