Moody's Investors Service has lowered its outlook on Slovakia's banking system from stable to negative. The reason Moody's gave was the risk of weaker economic growth and asset quality in the sector, the agency stated in its latest report on the outlook for the country's banking system, which was released on Tuesday, March 27.
Moody's estimates that the European Union's economic downturn will put pressure on asset quality and profits in the sector, the SITA newswire reported. These factors are mitigated by expectations that the sector will maintain good liquidity and adequate capitalisation. Moody's expects Slovakia's gross domestic product (GDP) growth to decelerate to about 1.7 percent in 2012, from 3.1 percent in 2011 and 4 percent in 2010. Despite profit growth over the last two years, Moody's predicted that the weakened business environment will mean that profits now fall.
Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.