Standard & Poor's is more concerned that a slower economy, sovereign debt issues and mortgage risks will depress U.S. bank industry profits and credit quality, the ratings agency said on Tuesday.

The comments come just a few days after S&P stripped the United States of its top AAA rating, contributing to market turmoil that weighed on stocks and lifted Treasury prices.

S&P said its base forecast for the U.S. bank industry in 2011 still calls for a moderate rise in net income because credit losses are decreasing, allowing banks to draw down on reserves previously set aside to cover losses.

Banks will continue to suffer from a moderate decline in revenues because of modest loan growth and low interest rates, S&P said in slides posted on its website for a quarterly banking conference call on Tuesday.

We expect 2Q trends to continue into 3Q but are more concerned about slower economic growth, sovereign debt issues, and continuing mortgage risks, S&P said. In the second quarter, bank credit ratings, earnings, asset quality and capital strength were all better.

S&P's comments came a day after shares of Bank of America Corp plunged 20 percent, capping three days in which the biggest U.S. bank lost almost a third of its value. Shares of Citigroup Inc , the third-biggest bank, fell 16.4 percent on Monday.

The stocks recovered some of those losses on Tuesday, with Bank of America up 7.5 percent and Citigroup up 10.2 percent at midday. The KBW Index of U.S. bank stocks <.BKX> was up 4 percent.

Threats to S&P's outlook include a U.S. economic slowdown and, particularly for large banks, mortgage market risks and European sovereign debt issues. U.S. regional banks are threatened by commercial real estate issues.

U.S. banks' direct exposure to debt-troubled European countries is not material, absent contagion, S&P said.

While the largest banks recently benefited from additional work on takeovers and debt underwriting, future improvements look less likely as U.S. economic trends weaken and sovereign debt issues continue, S&P said.

The outline repeated S&P's prior statements that its downgrade of U.S. government debt on Friday would not have an immediate or direct impact on its credit ratings for any banks.

The sovereign downgrade does not alter the government support assumptions that we factor into our ratings, said S&P, a unit of McGraw-Hill Cos Inc .

(Reporting by David Henry; Editing by Lisa Von Ahn and John Wallace)