Despite economic and regulatory uncertainty, S&P Global Ratings expects U.S. global systemically important banks (GSIBs) to continue to post good profitability, according to its recently-published report “U.S. Large Banks Q2 2025 Update: Stable Performance and Readiness for Evolving Challenges.”
Net interest income (NII) may continue to grow in the second half of the year, in part due to asset repricing. However, rate cuts could limit NII growth in the fourth quarter and 2026. Fee income should grow and support earnings, though trading revenue will likely subside in the second half of the year. Overall, profitability should remain largely robust.
Despite uncertainty around the final Basel III endgame rules, a build-up in capital ratios, reduced stress capital buffers and lower unrealized losses have opened the door for potential capital releases. However, GSIBs are unlikely to reduce capital materially until it becomes clear how regulators may update capital requirements. Capital distributions among GSIBs will likely differ based on their excess capital above minimum requirements.
Overall, asset quality pressures have stabilized this year. However, S&P still expects some risks of lagged worsening in asset quality metrics related to a slowing economy, although it should remain manageable. S&P expects delinquencies and charge-offs could rise modestly, driven especially by episodic charge-offs within commercial and industrial and commercial real estate and possible further consumer deterioration.
Deposits continued to climb in the second quarter, nearing the 2022 peak. Lower rates, loan growth and slowing of the Fed’s quantitative tightening could support further growth of deposits and liquidity. GSIBs are likely to maintain good contingent liquidity and have favorable deposit-to-loan ratios, with an adequate amount of cash to assets.
