Strong balance sheets keep global banks on stable outlook despite macroeconomic gloom

Basel 3.1 reforms will lead banks to apply high haircuts to unsustainably high property values and adjust mortgage risk weights to better differentiate between low-risk and high-risk loans.Speakers: Alexander Zeidler, VP-Sr Credit Officer at Moody's Ratings; Guillaume Lucien-Baugas, VP-Senior Analyst at Moody's RatingsHosts: Aaron Johnson, VP-Senior Research Writer at Moody's Ratings; Danielle Reed, VP-Senior Research Writer at Moody's RatingsRelated Research:Basel 3.1 will reduce risk of boom and bust property cycles, boost private credit marketRising interest rates will weaken commercial property values and raise refinancing riskExplanatory comment – Haircuts smooth CRE values through the property market cycle

As cyberattacks rise and AI poses new dangers, Moody’s analysts discuss banks’ own views of their cybersecurity defenses and explain the EU’s plan to rein in risks from third-party tech providers. Speakers: Lucas Viegas, VP-Senior Analyst, Moody’s Ratings; Brandon O’Halloran, AVP-Analyst, Moody’s RatingsHost: Danielle Reed, VP – Senior Research Writer, Moody’s RatingsRelated Research: Financial Institutions – Europe: Stringent new tech rules for banks and their IT providers will improve cybersecurityFinancial Institutions – Global: 2023 Cyber Survey - Escalating cyberthreats drive up budgets as banks fortify defensesCybersecurity – Cross Region: Generative AI may increase cyber risk rather than lessen itFinancial Institutions – Global: Ransomware attack on ICBC FS highlights cyber risks to the financial system

Our 2024 Banking System Outlooks show more European systems joining the US on negative as economies slow and loan performance weakens. China stays negative, while India is positive.Speakers: Warren Kornfeld, Senior Vice President, Moody’s Ratings; Effie Tsotsani, VP-Senior Analyst, Moody’s Ratings; Juwon Lee, VP-Senior Analyst, Moody’s RatingsHosts: Carolyn Henson, VP – Senior Research Writer, Myles Neligan, VP- Senior Research Writer, Moody’s Ratings

Swedish lender Klarna’s AI assistant is driving material credit improvement this year. In the US, disclosures from Wells Fargo point to what’s ahead for banks’ commercial real estate loan performance.Speakers: Stephen Tu, VP-Senior Credit Officer, Moody’s Ratings; Allen Tischler, Senior Vice President, Moody’s RatingsHost: Danielle Reed, VP – Senior Research Writer, Moody’s Ratings

Over the next several years private credit in Europe will grow, largely because of companies’ substantial refinancing needs. But banks are already fighting to gain back market share.Speakers: Guillaume Lucien-Baugas, VP-Senior Analyst, Moody’s Ratings; Jeanine Arnold, Senior Vice President, Moody’s RatingsHost: Danielle Reed, VP – Senior Research Writer, Moody’s Investors ServiceRelated Research:Private Credit – Europe: Europe's private credit market will accelerate, along with competition and risk

We discuss the severe thunderstorms' rising insured costs. Plus: Earnings weakness in the Medicare Advantage business and US commercial real estate exposure of German banks.Speakers:  Bernhard Held, VP-Sr Credit Officer, Moody’s Investors Service; Dean Ungar, VP-Sr Credit Officer, Moody’s Investors Service; Evelyn Ocas Salazar, AVP-Analyst, Moody’s Investors Service; Juergen Grieser, Sr Dir Mgr-Analytics & Modeling, Moody’s RMSHosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors ServiceRelated Research:Property & Casualty Insurance – US: Battered by convective storms, carriers seek higher prices, advanced modelsHealth Insurance – US: Medicare Advantage continues to grow, but its profitability is weakeningBanks – Europe: Most EU banks have limited direct exposure to US CRE, German banks are more exposed

Steve Tu, Farooq Khan and Petr Paklin of Moody's, with Joe Lyons of Bitsight, on how AI will change banks; On Fast Finance, we discuss Evergrande's liquidation and upcoming FHLBank reforms.Speakers:  David Yin, VP – Senior Credit Officer, Moody’s Investors Service; Allen Tischler, Senior Vice President, Moody’s Investors Service; Stephen Tu, VP – Senior Credit Officer, Moody’s Investors Service; Farooq Khan, VP – Senior Analyst, Moody’s Investors Service; Petr Paklin, AVP – Analyst, Moody’s Investors Service; Joe Lyons, Senior Director Cyber Risk Quantification & Ratings Research, Bitsight Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Carolyn Henson, VP – Senior Research Writer, Moody’s Investors ServiceRelated Research:Property – China: Court order to liquidate China Evergrande will weaken fragile market sentimentBanks – US: FAQ: Initial impact of FHFA reforms of FHLBanks will be less emergency liquidity for troubled banksBanks – Global: Banks are well-placed for substantial efficiency gains with deep AI adoption

Cristiano Ventricelli explains how recent improvements to digital finance systems could help them gain scale. Plus, we discuss BlackRock’s recent acquisition and the SEC’s approval of spot Bitcoin ETFs.Speakers:  Abhi Srivastava, AVP – Analyst, Moody’s Investors Service; Neal Epstein, VP-Senior Credit Officer, Moody’s Investors Service; Cristiano Ventricelli, VP-Senior AnalystHosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors ServiceRelated Research:Decentralized Finance and Digital Assets – Cross Region: SEC approves spot Bitcoin ETFs, advancing cryptocurrency institutionalizationBlackRock, Inc.: Acquisition of Global Infrastructure Partners is credit positiveDecentralized Finance and Digital Assets – Global - 2024 Outlook: Digital finance slowly, steadily moves toward interoperability, standardization

Our global outlook for the sector remains negative for 2024, but the picture for non-bank finance companies is more varied than a year ago, with easing conditions in some markets and businesses.Speakers: Bruno Baretta, AVP – Analyst, Moody’s Investors ServiceHost: Michael Porta, VP – Senior Research Writer, Moody’s Investors Service

Weak results in personal lines drive the negative outlook for property and casualty insurance, while life insurance benefits from higher interest rates.Speakers: Bruce Ballentine, VP – Senior Credit Officer, Moody’s Investors Service; Christian Badorff, VP – Senior Credit Officer, Moody’s Investors ServiceHosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service