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Banking Industry Country Risk Assessment Update: May 2025

This article presents updates to S&P Global Ratings' views on the 89 banking systems that it currently reviews under its criteria "Banking Industry Country Risk Assessment Methodology And Assumptions," published on Dec. 9, 2021, that it uses primarily when applying its methodologies to develop the stand-alone credit profile and issuer credit rating on a financial institution ("Financial Institutions Rating Methodology," Dec. 9, 2021).

We typically update this publication every month to summarize our latest BICRA assessments by group and country (table 1), economic and industry risk scores--summarized in chart 1--and components (table 2), and related assessments (government support assessments by region (table 3) and BICRA scores for estimates and regional averages (table 4). All these variables are current as of time of publication of this article, but some may be amended before the publication of our next monthly update.

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Latest BICRA Action And Reports

Since we last published the BICRA update on April 28, 2025, we have:

  • Bosnia and Herzegovina: Revised the industry risk to '8' from '7'. We also revised some scores on industry risk-related factors.
  • Czechia: Revised the industry risk to '3' from '4'. We also revised some scores on industry risk-related factors.
  • Guatemala: Revised the BICRA group to '6' from '7' and revised our economic risk score to '7' from '8'. We also revised some scores on economic risk-related factors. We revised the economic risk trend to stable from positive.
  • Israel: Revised the economic risk trend to stable from negative.
  • Kyrgyzstan: Assigned a BICRA in Group 8.

Since we last published the BICRA update on April 28, 2025, we also published comprehensive BICRA reports on Armenia, Greece, Italy, Kenya, Norway, Poland, Spain, and Sweden.

Bosnia and Herzegovina

We revised our assessment of industry risk to '8' from '7' for Bosnia and Herzegovina (BiH). We see a higher risk that BiH's complex institutional framework may add challenges to the effectiveness and timeliness of banking regulation and supervision. BiH's institutional and governance arrangements are among the most complex in the world and date back to the Dayton Peace Accords in 1995, which established the current political structure comprising two entities: the Federation of Bosnia and Herzegovina and Republika Srpska. Each entity enjoys significant autonomy, including its own banking agency responsible for prudent regulation. While these agencies coordinate to maintain alignment in the regulatory framework, recent political tensions are likely to hinder consensus on critical policy initiatives.

Czechia

We revised our assessment of industry risk to '3' from '4' for Czechia. Funding costs for banks in Czechia have risen in recent years due to higher interest rates and intense competition within the sector to attract deposits. However, the availability of ample funds has allowed Czech banks to expand their lending books and enhance profitability. We believe banks will continue to be highly profitable, well capitalized, maintain sufficient liquidity, and hold solid asset quality.

Guatemala

We revised our assessment of economic risk in Guatemala to '7' from '8' and reclassified the country's banking system to Group '6' from Group '7'. Our anchor for banks operating in Guatemala has now improved to 'bb+' from 'bb'. The trend to economic risk was revised to stable from positive.

Despite the global economic uncertainty, we think Guatemala has very strong external and fiscal buffers to manage external shocks. The revised BICRA also reflects Guatemala's maintenance of conservative macroeconomic policies with the lowest level of net government debt in Latin America, despite potential bouts of political uncertainty.

Israel

We revised our assessment of economic risk trend to stable from negative for Israel. Israeli banks will continue facing an uncertain and challenging economic environment amid the high geopolitical risk in the country. However, banks' profitability and asset quality metrics have demonstrated resilience over the past few quarters despite the persistent conflict, and we expect their robust financials would help support banks' creditworthiness.

Kyrgyzstan

We have assigned Kyrgyzstan to BICRA Group '8'. The economic risk score for Kyrgyzstan is '8' and the industry risk score is '8'. The economic and industry risk trends are both stable.

About BICRAs

S&P Global Ratings uses its BICRA economic risk and industry risk scores to determine the anchor for a financial institution, which is the starting point of a rating (see paragraph 7 in the financial institutions criteria). Our BICRA criteria evaluate and compare the relative strength of global banking systems. BICRA scores are on a scale from 1 to 10 (see table 1), with group 1 representing the lowest-risk banking systems and group 10 the highest-risk ones (see paragraph 4 in the BICRA criteria).

A BICRA analysis for a country incorporates the entire country's financial system, taking into account the impact of entities other than banks on the financial system. It also looks at the conditions under which rated and unrated entities operate.

Our analysis of economic risk of a banking sector takes into account the structure, performance, flexibility, and stability of the country's economy, actual or potential imbalances in the economy, and the credit risk stemming from economic participants, mainly households and enterprises.

Our view of industry risk factors in the quality, effectiveness, and track record of bank regulation and supervision, as well as the competitive environment of a country's banking industry, including its risk appetite, structure, risk-adjusted financial performance, and possible distortions in the market. Industry risk also addresses the variety and stability of funding options available to banks, including the role of the central bank and government.

Part of our review involves an evaluation of the capacity and willingness of sovereigns (see table 3) to support failing banks (or nonbank financial institutions where applicable) during a crisis based on their systemic importance, classifying sovereigns into three groups: highly supportive, supportive, and uncertain (see paragraph 225 in the "Financial Institutions Rating Methodology"). Our view of the likelihood of extraordinary government support may influence our issuer credit rating on systemically important institutions in a particular country, according to our financial institutions criteria.

Table 1

BICRAs by group and country
(Group '1' to '10', from lowest to highest risk)
Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8 Group 9 Group 10
Australia Chile Iceland Andorra Brazil Bahrain Albania Argentina Belarus
Austria Czechia Israel Bermuda Brunei Georgia Armenia Bangladesh Egypt
Belgium Denmark Italy Greece China Kazakhstan Azerbaijan Cambodia Iraq
Canada France Kuwait Hungary Cyprus Jordan Bosnia and Herzegovina El Salvador Nigeria
Finland Germany Malaysia India Colombia Morocco Costa Rica Kenya Tunisia
Hong Kong Ireland New Zealand Macao Guatemala Paraguay Honduras Mongolia Ukraine
Liechtenstein Japan Poland Malta Indonesia Thailand Jamaica Turkiye
Luxembourg Korea Portugal Mexico Oman Kyrgyzstan Vietnam
Norway Netherlands Saudi Arabia Panama South Africa Uzbekistan
Singapore Spain Slovenia Peru Trinidad and Tobago
Sweden U.K. Taiwan Philippines
Switzerland U.S. Qatar
United Arab Emirates
Uruguay
Changes to this table since our previous monthly article published April 28, 2025: Guatemala, Kyrgyzstan. Data as of May 30, 2025. BICRAs -- Banking Industry Country Risk Assessments. Source: S&P Global Ratings.

Table 2a

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Table 2b

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Download table here.

Chart 1a

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Chart 1b

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We assess the capacity and willingness of sovereigns (see table 3) to support failing banks (or nonbank financial institutions where applicable) during a crisis based on their systemic importance, classifying sovereigns into three groups: highly supportive, supportive, and uncertain (see paragraph 225 in the "Financial Institutions Rating Methodology").

Table 3

Government support assessment by region
--Asia-Pacific-- --CEEMEA-- --Latin America and Caribbean-- --North America-- --Western Europe--
Country Government support assessment Country Government support assessment Country Government support assessment Country Government support assessment Country Government support assessment
Australia Highly supportive Kuwait Highly supportive Brazil Supportive Bermuda Supportive Austria Uncertain
Brunei Highly supportive Qatar Highly supportive Chile Supportive Canada Supportive Andorra Uncertain
China Highly supportive Saudi Arabia Highly supportive Colombia Supportive United States of America Uncertain Belgium Uncertain
India Highly supportive United Arab Emirates Highly supportive Guatemala Supportive Cyprus Uncertain
Indonesia Highly supportive Israel Supportive Mexico Supportive Denmark Uncertain
Japan Highly supportive Kazakhstan Supportive Peru Supportive Finland Uncertain
Korea Highly supportive Morocco Supportive Trinidad and Tobago Supportive France Uncertain
Malaysia Highly supportive Uzbekistan Supportive Uruguay Supportive Germany Uncertain
Philippines Highly supportive Albania Uncertain Argentina Uncertain Greece Uncertain
Singapore Highly supportive Armenia Uncertain Costa Rica Uncertain Iceland Uncertain
Taiwan Highly supportive Azerbaijan Uncertain El Salvador Uncertain Ireland Uncertain
Thailand Highly supportive Bahrain Uncertain Honduras Uncertain Italy Uncertain
Vietnam Highly supportive Belarus Uncertain Jamaica Uncertain Liechtenstein Uncertain
Hong Kong Supportive Bosnia and Herzegovina Uncertain Panama Uncertain Luxembourg Uncertain
Macao Supportive Czech Republic Uncertain Paraguay Uncertain Malta Uncertain
Mongolia Supportive Egypt Uncertain Netherlands Uncertain
Bangladesh Uncertain Georgia Uncertain Norway Uncertain
Cambodia Uncertain Hungary Uncertain Portugal Uncertain
New Zealand Uncertain Iraq Uncertain Spain Uncertain
Jordan Uncertain Sweden Uncertain
Kenya Uncertain Switzerland Uncertain
Kyrgyzstan Uncertain U.K. Uncertain
Nigeria Uncertain
Oman Uncertain
Poland Uncertain
Slovenia Uncertain
South Africa Uncertain
Tunisia Uncertain
Turkiye Uncertain
Ukraine Uncertain
Change to this table since our previous monthly article published on April 28, 2025: Assigned Kyrgyzstan CEEMEA -- Central and Eastern Europe, the Middle East, and Africa. Data as of May 30, 2025. Source: S&P Global Ratings.

BICRA Estimates And Regional Averages

Countries for which we do not perform BICRAs are assigned estimates or proxies (depending on the magnitude of rated entities' aggregate exposure to issuers in these jurisdictions) for the purpose of computing risk-adjusted capital ratios. These estimates are made using a simplified BICRA analysis for jurisdictions that rated banks have significant aggregate exposure to--typically of US$5 billion or more (across all the entities we rate). We may also perform a BICRA estimate if rated banks' aggregate exposure is not significant, but we consider it appropriate to assign an estimate.

Our BICRA proxies are usually calculated for jurisdictions for which global exposure is not very significant (i.e., typically below US$5 billion). The proxies are based on our foreign currency sovereign rating on the country for which we estimate the BICRA and economic and industry risk scores (see paragraph 12 in "Risk-Adjusted Capital Framework Methodology," April 30, 2024).

The BICRAs, economic risk scores, equity market groups (see paragraph 125), and long-term foreign currency sovereign credit ratings that we assign to groups of countries and to regions represent the GDP-weighted average of BICRAs, economic risk scores, equity market groups, and long-term foreign currency sovereign credit ratings on the countries in these groups and regions (see paragraph 151 in "Risk-Adjusted Capital Framework Methodology").

Table 4

BICRA scores for estimates and regional averages
--BICRA estimates-- --BICRA regional averages--
BICRA Group Economic Risk BICRA Group Economic Risk
Bulgaria 7 7 Africa 9 9
Croatia 6 6 Asia Pacific 5 5
Estonia 4 4 Central America and the Caribbean 8 8
Latvia 4 4 Europe, the Middle East and Africa 5 5
Lithuania 4 4 Europe 4 4
Romania 7 7 European Union 3 3
Serbia 7 7 Gulf Cooperation Council 5 5
Slovakia 5 6 Latin America 6 7
North America 3 3
World 4 5
Data as of May 30, 2025. There are no changes to this table since our previous monthly article published on April 28, 2025. For the purposes of calculating the scores in the table, the North America region includes only Canada and the U.S.

Related Criteria

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Alfredo E Calvo, Mexico City + 52 55 5081 4436;
alfredo.calvo@spglobal.com
Secondary Contacts:Emmanuel F Volland, Paris + 33 14 420 6696;
emmanuel.volland@spglobal.com
Devi Aurora, New York + 1 (212) 438 3055;
devi.aurora@spglobal.com
Elena Iparraguirre, Madrid + 34 91 389 6963;
elena.iparraguirre@spglobal.com
Harm Semder, Frankfurt + 49 693 399 9158;
harm.semder@spglobal.com
Mehdi El mrabet, Paris + 33 14 075 2514;
mehdi.el-mrabet@spglobal.com

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