MOODY’S Investors Service changed its outlook for Slovakia’s banking system from stable to negative, citing weaker economic growth and quality of assets in the banking sector, in its most recent rating released on March 27.
Moody’s expects that the economic downturn within the European Union will put pressure on asset quality and profits in Slovakia’s banking sector, the SITA newswire wrote, while noting that these factors are somewhat mitigated by expectations that the sector will maintain good liquidity and adequate capitalisation.
The rating agency wrote that it expects growth in Slovakia’s GDP to decelerate to about 1.7 percent in 2012 from 3.1 percent in 2011 and 4 percent in 2010. Despite profit growth in the banking sector over the last two years, Moody’s expects profits will now fall because of the weakened business environment.