We have a balanced base case for European banks going into 2026. Profitability is resilient, asset quality and capital buffers are solid. We have upgraded our profitability forecasts for 2026 and 2027. But several risk factors could test the outlook.

Economic growth across the CEE region in 2026 will hinge on the effective absorption of EU funds and the recovery in external demand, which will be crucial for investment and productivity dynamics.

In accordance with EU and UK regulations for credit rating agencies, sovereign and sub-sovereign ratings must be reviewed at least every six months and publication must fall on a Friday after the close of all regulated markets in the EU and UK.

Les économies mondiale et européenne demeurent résilientes, même en tenant compte du ralentissement mondial modéré de 2025. Mais les risques pesant sur la reprise augmentent, soulignant des perspectives négatives à moyen terme.

The global and European economies have been resilient in recent years even accounting for the modest global slowdown of 2025. But risks for the recovery are rising, underscoring a negative medium-run global macro and credit outlook.

Thursday 11 December 2025 - 15:00 (CET)

The cut in minimum Long-Term Funding Ratio (WFD) requirements from 40% to 20% recommended by Poland’s Financial Supervision Authority and the inclusion of capped retail deposits come alongside bold measures to strengthen the covered bond market.

Elevated geopolitical tensions, deeper political polarisation and persistent fiscal challenges outweigh the potential for stronger growth and instances of fiscal resilience, driving our overall negative sovereign credit outlook.

France’s intrinsic resilience underpins our four-notch rating differential with Italy, as similar funding conditions contrast with different budgetary dynamics and governance challenges, although rating convergence is now more likely in the years ahead.

Profitability is set to remain strong in 2026. Moderate loan growth, steady fee expansion and stable costs will support profits. But we are projecting an increase in provisions as default rates normalise, while economic and other risks remain high.