KBRA Financial Intelligence

1Q23 KFI Scores Show Broad Decline in Bank Grades

KFI Scores broadly fell in 1Q23 to the lowest aggregate level in two years, with 858 total downgrades outpacing 488 upgrades.

The decline reflects the challenges banks are facing with the rapid rise in interest rates. The aggressive hikes have lowered the value of bank investment portfolios, as well as increased costs to maintain deposits. Before 1Q23, KFI Scores had generally been improving over the last two years on a strengthening economy following initial pandemic disruption.