OREANDA-NEWS. June 04, 2015. Operating conditions remain challenging in most major emerging-market (EM) banking systems in 2015, Fitch Ratings says in the latest edition of its regular 'EM Banking System Datawatch'. This is due to weaker economies, slower growth, seasoning loan books and tighter margins. These factors, combined with Negative Outlooks on sovereign ratings, drive Negative Outlooks on most banks in Russia, Brazil and South Africa. But impairment of lenders' financial metrics in these markets has so far been limited or manageable, and Fitch expects any negative rating actions to be moderate in scope.

Still solid, although slowing, economic growth and significant loss-absorption buffers limit downside risks for banks' financial profiles in most other EMs that have experienced recent rapid credit expansions. In many of these markets - across Latin America and Asia, and in Turkey - Fitch views more moderate loan growth as credit positive, as it should prevent overheating.

Fitch's recent review of sovereign support primarily affected bank ratings in developed markets, with lenders in central and eastern Europe the only ones in EMs to suffer downgrades. In most large EMs, including China, India, Russia, Turkey and Brazil, ratings of systemically important banks, particularly those with government ownership, remain underpinned by potential sovereign support, limiting downgrade risks from weaker economies and/or bank metrics.