Risks to the global banking sector will remain heightened in 2017 amid sluggish growth, political uncertainty and low interest rates according to a report from rating agency Standard and Poor's.
S&P's 2017 Global Credit Outlook for Banks report says that while most international banks have had a period of balance sheet strengthening they now face a range of risks that will put pressure on the long-term sustainability of their current business models.
"In our view, constraining factors for bank ratings in 2017 include weaker
prospects for earnings growth globally, potential risks related to Brexit, and
more generally increased political risks."
Of the 20 largest global banking markets analysed by the agency 11 were facing negative pressure, seven were stable and only two had positive trends.
Since its last report in July the number of banks with a negative outlook or those on a negative credit watch increased in the Asia-Pacific and Latin America regions.
Specific analysis of the Asia-Pacific region by S&P said it expected negative rating trends to persist in 2017 driven by negative economic trends in key banking sections including China, Australia, Hong Kong, Japan and India.
"Performance prospects for the Chinese economy in 2017 will set the scene for regional bank quality.
"For China's banking system in 2017, we are principally concerned with growing debt leverage in the economy and escalating credit losses.
"Highly leveraged households elsewhere--including in Singapore, Australia, Thailand, Malaysia, and Korea--are also a risk factor for credit quality."
S&P said it was also concerned about markets risks in the region including likely tighter monetary policy in the US, potentially volatile foreign currency and commodity prices, and frothy property prices in some countries.
"Heading into 2017, we expect that escalating property prices in some jurisdictions are contributing to economic imbalances that ultimately may reflect negatively on bank credit quality.
"We believe property is a key risk factor for financial institution ratings in 2017 in Hong Kong and Australia."
While the report does not mention New Zealand specifically all four of New Zealand's major banks are Australian-owned.