Moody’s bank downgrade no surprise to StarMine users
The Moody’s downgrade of 15 global banks on June 21 comes mostly as no surprise to StarMine clients.
The table shows the StarMine SmartRatios Implied Rating, with only three banks implied as “investment grade” by that model. These are Royal Bank of Canada, UBS and HSBC Holdings. Royal Bank of Canada has the highest SmartRatios rank (not shown), though it’s only 42 out of 100 (1 is the lowest rank and 100 is the highest). It gets more disappointing after that.
The SmartRatios model is a default prediction model that provides a view of the firm’s credit condition and financial health by analyzing a wide array of accounting ratios that are predictive of credit risk. Updated daily, it incorporates analyst estimates which our research shows have significantly more explanatory power in predicting defaults than using reported actual results alone.