Western European Banks Show Resilience Against US Tariff Measures

According to Fitch Ratings, Western European banks are in a solid position to navigate the increasing uncertainty surrounding US tariff measures. The agency highlighted their years of robust performance and strong asset quality as key factors in their resilience.

Potential Risks and Outlook

With only about 4% of bank ratings currently carrying a 'Negative Outlook,' the sector's stability is evident. However, Fitch warns that worsening economic indicators, especially in growth and employment, could lead to a revision of its "neutral" 2025 financial sector outlook to "deteriorating."

Impact on Global and Domestic Banks

Larger banks with exposure to global trade finance may face quicker impacts from shrinking trade volumes, while domestically focused banks, though more shielded, are not immune to economic fallout.

Future Projections

Fitch anticipates modest lending growth to be further dampened by declining lending volumes and lower interest rates, which would reduce net interest margins, until final tariffs are announced.