There is not much prospect of Standard & Poor's lifting the credit ratings of Australian banks. In a commentary published yesterday, the ratings agency said: "It is our opinion that the challenge for most Australian financial institutions will be to defend ratings at current levels rather than transition to higher ratings."S&P said that its "most likely base case [remains] that we believe that the financial profiles of Australian banks will remain sound in 2013, and broadly in line with 2012. "Asset quality, capitalisation, and earnings profiles of Australian banks compare favourably by international standards, and we expect this trend will prevail. "Unless a materially more negative macroeconomic scenario unfolds, we expect non-performing asset, loan loss provisioning, and profitability metrics to be broadly flat in 2013, while risk-adjusted capital ratios may incrementally improve as banks transition to a Basel III environment."S&P said that "funding remains a key rating concern [and that] should there be dislocation affecting global funding markets comfort would, to an extent, be derived from government support measures affecting bank deposit funding."The ratings agency said that "international developments [such as] a China downturn, euro-stresses, or other potential negative developments… [would] disrupt the orderly flow of capital [and] could potentially be more negative for Australia than for many other countries."