KUALA LUMPUR (Jan 6): Rating outlooks have turned negative for banks in most jurisdictions this year compared to 2020, said Fitch Ratings.

In its "2021 Global Banks' Outlook Compendium", the rating agency said this reflects downside risks to its baseline scenario from a potentially sluggish economic recovery following sharp deterioration in 2020 owing to the pandemic.

It said negative rating outlooks also reflect pressure on sovereign support-driven ratings.

“We expect asset-quality risks to crystallise in 2021 as government support measures for economies and borrowers are unwound, while an extended period of low interest rates will affect profitability.

“Pressure on ratings could increase if the economic downturn is more prolonged than we expect,” it said.

Meanwhile, Fitch said the rating outlook for Malaysian banks was “negative”, while the sector outlook was “stable”.

It said the key issues for Malaysian banks were slow non-performing loan recognition, lower profitability and property market risks.