Here's why global bank rating trends still bleed red in 1H16

30% of emerging market bank pose negative outlooks.

For the fourth consecutive six-month period, global bank rating trends have remained on the gloomy side, with negative outlooks outweighing positive outlooks for over 17%.

According to Fitch Ratings, the negative trend in emerging market (EM) banks has spurred such uninspiring trend, with negative outlook reaching as high as 22% versus the 5% positives, a level not seen since 2009.

EM banks experienced majority of the downtrends as 26% of bank ratings are still being driven by sovereign support.

"Sovereign downgrades triggered many EM bank downgrades because they signalled weakened ability to support," Fitch said in a press statement.

According to Fitch, this downhill trend may linger in the medium term as EM regions accounted for two-thirds of the the Issuer Default Ratings downgrades.

"Low commodity prices, weaker operating environments and sovereign downgrades were largely responsible for the 24 EM downgrades in 1H16 and the large number of negative outlooks," the credit ratings group said.

Meanwhile, Fitch registered 16 rating upgrades in the developed market (DM) banks for the first half of this year.

This narrowed the gap in DM banks with negative outlook at 13% and positives at 10%.

“DM banks have made significant progress in reducing legacy assets and strengthening capitalization and we expect those banks, which have successfully restructured operations, to see some upside rating potential,” Fitch said.