Fitch warns U.S. banks of continued high interest rate pressure
International credit rating agency Fitch Ratings reported that high interest rates continue to weigh on the U.S. banking sector despite strong financial results from major banks in the third quarter of 2026.
According to its assessment published on October 26, banks' financial performance was supported by growth in net interest income, increased revenue from capital markets activities, and stable credit costs. Excluding custody and trust banks, aggregate revenue at major U.S. banks declined by 4% quarter over quarter but increased by 12% compared with the same period last year.
Fitch noted that while elevated interest rates can support banks' net interest income, they also put pressure on equity through unrealized losses in securities portfolios. The agency warned that borrowers' repayment capacity could weaken, particularly in commercial real estate and consumer lending. It also emphasized that the impact of high interest rates varies depending on banks' funding structures and deposit costs. Fitch added that most major U.S. banks expect further increases in net interest income and margins through 2027 and have largely maintained their revenue and earnings forecasts for 2026 and 2027.
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