Fitch: Outlook negative for U.S. financial institutions in 2009

Fitch Ratings said the 2009 rating outlook for U.S. financial institutions remains negative but that downgrades are not expected to be as numerous or drastic as in 2008.

Rating actions taken in 2008 incorporated expectations of high loan loss provisions and weak profitability through mid-2009, the agency said, but government intervention has likely reduced the risks of multi-notch downgrades for the largest financial firms. Consolidation is also expected to increase, particularly across regional banks.

The negative outlook reflects Fitch's expectation that key financial metrics will remain significantly weak for 2009 due to an expected bleak operating environment and that profitability and credit quality metrics will exhibit high degrees of stress.

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