Credit rating agency Standard & Poor's has warned that the downturn in the European economy will put further pressure on banks over the next couple of years.
In a report on the sector, S&P also said banks in Ireland, Spain and the UK faced the toughest challenges because of the rapid slowdown in property markets in these countries.
The agency said the focus was now shifting from losses on risky assets, some linked to the US sub-prime mortgage market, to problems with 'traditional' loans as European economies slowed.
The agency said it expected this to lead to slower lending and revenues before feeding into higher charges for bad debts. It also warned that these factors would feed into banks' performances in the second half of this year, and even more strongly next year.
S&P said the slowdown in the Irish property market was putting pressure on some property developers, and had also created a pocket of mortgage borrowers with negative equity problems.
But the agency also said changes in the market created opportunities for some banks, with stronger banks perhaps able to buy smaller players who could come under pressure.
Last month S&P lowered its rating on Irish Life Permanent, and also changed its outlook for AIB and Bank of Ireland from positive to stable.
Credit rating agencies rate the ability of banks and other companies to meet their financial obligations and their ratings are watched by those who lend money in capital markets.
