US banks will be "significantly strained" by credit losses if the global economy slips back into a recession, Moody's Investor Service said on Thursday.
The ratings agency, in its quarterly research note, said US banks' loan losses have begun to improve as the global economy has healed since the 2008 financial crisis.
But losses remain near historic highs and have not improved as quickly as they deteriorated in 2009.
Additional losses would strain banks' credit ratings, absent moves to bolster capital, Moody's said.
The three main US ratings agencies were slow to recognize the credit issues at the major banks - such as Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co - in the years leading up to the crisis.
Moody's projects US banks' loan losses will return to normal levels over the next 12 to 18 months, but in an uneven manner.
Moody's estimates US banks will recognize $744 billion in loan charge-offs between 2008 - the height of the crisis - and the end of next year.
So far, Moody's estimates US banks have recognized two-thirds, or $497 billion, of those charge-offs, with $247 billion remaining.
Those losses, Moody's said, are likely manageable, given banks' loan loss reserves, tangible common equity and pre-tax income.