Fitch Ratings has placed the ratings of nine U.S. banking companies and their subsidiaries on Rating Watch Negative, based in its view that they may be more vulnerable to the credit cycle, the rating agency said Friday.

The affected banks are: BB&T Corp., Discover Financial Services, Fifth Third Bancorp, KeyCorp, M&T Bank Corp., Popular, Inc., Regions Financial Corp., SunTrust Banks Inc., and Wells Fargo & Co.

The rating agency says that these actions reflect Fitch’s view “that these institutions show an incrementally higher level of vulnerability to the credit deterioration which Fitch expects to continue across virtually all loan categories. This is anticipated to place additional stress on earnings, as provision requirements are likely to remain elevated over the intermediate term.”

That said, Fitch also notes that it expects that the majority of the downgrades will be limited to one notch, although certain hybrid capital instruments could see additional notching.

These actions reflect the completion of the initial phase of Fitch’s most recent U.S. bank review announced on May 7, which included, but was not limited to, the 19 banks included in the U.S. government stress tests. It does not anticipate taking any ratings action on any of the other banks it reviewed as a result of this review, although it notes that a number of them remain on Rating Watch Negative or their ratings have previously been assigned a Negative Outlook.

Fitch says that its outlook for the U.S. banking industry has been negative since 2007, with the ratings of many banks either downgraded and/or placed on Negative Outlook in the past 18 months. “Prior rating actions incorporated the expectation of meaningful credit deterioration, however, evaluation of the most recent trends suggests further loan quality declines, placing additional pressure on certain ratings,” it says.

“While credit deterioration has been apparent for some time in riskier classes of residential mortgages, as well as in home equity loans and residential construction loans, loss trends have continued to worsen and additional asset classes have been impacted. Of note, credit card loss rates spiked significantly in the past two quarters. In addition, Fitch believes there remains considerable risk of meaningful erosion in loss rates on commercial real estate and, to a lesser extent, commercial and industrial loans,” it says.

Fitch says it anticipates completing its review of the banks placed on rating watch in the next month, with the potential for rating actions sooner for those issuers that are viewed as under greater stress.

IE