NEW YORK— Amid ongoing economic and regulatory uncertainty, S&P Global Ratings projects that U.S. global systemically important banks (GSIBs) will maintain solid profitability, according to its newly released report, “U.S. Large Banks Q2 2025 Update: Stable Performance and Readiness for Evolving Challenges.”
The firm expects net interest income to continue rising through the second half of the year, aided by asset repricing, though anticipated rate cuts could temper that growth in late 2025 and into 2026. Fee income is poised to strengthen and bolster earnings, even as trading revenue is expected to ease in the latter half of the year. Overall, S&P said profitability should remain resilient.
“Despite uncertainty around the final Basel III endgame rules, a build-up in capital ratios, reduced stress capital buffers, and lower unrealized losses have opened the door for potential capital releases. However, GSIBs are unlikely to reduce capital materially until it becomes clear how regulators may update capital requirements. Capital distributions among GSIBs will likely differ based on their excess capital above minimum requirements,” S&P Global said.
Overall, asset quality pressures have stabilized this year, S&P said.
“However, we still expect some risks of lagged worsening in asset quality metrics related to a slowing economy, although it should remain manageable. We expect delinquencies and charge-offs could rise modestly, driven especially by episodic charge-offs within commercial and industrial (C&I) and commercial real estate (CRE), and possible further consumer deterioration,” the organization stated.
Deposits continued to climb in the second quarter, nearing the 2022 peak. Lower rates, loan growth, and slowing of the Fed's quantitative tightening could support further growth of deposits and liquidity. GSIBs are likely to maintain good contingent liquidity and have favorable deposit-to-loan ratios, with an adequate amount of cash to assets, S&P Global noted.