People walk past a branch of JPMorgan Chase Bank in New York, the United States, on May 1, 2023. [Photo/Xinhua]

Fitch Ratings warned on Tuesday that dozens of U.S. banks, including JPMorgan, the largest bank in the country, could be at risk of sweeping rating downgrades.

Fitch lowered its "operating environment" rating for U.S. banks to AA- from AA in June, citing pressure on the country's credit rating, regulatory gaps exposed by the March regional bank failures and uncertainty around interest rates, a Fitch analyst told CNBC.

The move went largely unnoticed because it didn't trigger any downgrades on banks, analyst Chris Wolfe said.

But another one-notch downgrade of the U.S. banking industry's score, from AA- to A+, would force the ratings agency to reevaluate ratings for more than 70 U.S. Banks, including JPMorgan, according to Wolfe. That could potentially push some weaker lenders closer to non-investment-grade status.

A related issue is whether the banking industry's loan defaults rise beyond what Fitch considers a historically normal level of losses, said Wolfe.

Defaults tend to rise in a rate-hiking environment, and Fitch has expressed concern on the impact of office loan defaults on smaller banks.

Following the Fitch's warning, shares of lenders including JPMorgan, Bank of America and Citigroup dipped Tuesday.

Underpinning the Fitch's warning is the restrictive monetary policy that the Federal Reserve has imposed over the last 18 months, said Business Insider in a report on Tuesday.

Expensive borrowing costs as well as heightened lending standards have created a pressure-cooker environment for many banks and non-bank businesses with large corporate debts, it added.

Last week, Moody's slashed the credit ratings on 10 small and midsized U.S. banks and put major lenders like Bank of New York Mellon, Northern Trust and U.S. Bancorp under review for potential downgrades.

Early this month, Fitch downgraded the U.S. long-term credit rating, citing political dysfunction and growing debt loads.

This time, Fitch is intent on signaling to the market that "bank downgrades, while not a foregone conclusion, are a real risk," said Wolfe.

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