Moody's says outlook for Italian banks stays negative
MILAN Oct 16 (Reuters) - Rating agency Moody's said on Wednesday its outlook for the Italian banking system remained negative, unchanged from 2009, as the country's fragile economy pushed up the level of problem loans and dented core profits.
Moody's acknowledged that Italian lenders, which came under severe pressure during the sovereign debt crisis, had boosted their capital base and improved access to funding. But it said it sees operating conditions remaining negative over the next 12-18 months in light of persistent economic weakness at home.
The rating agency also said it anticipated that asset quality at Italian banks, now the subject of scrutiny by the Bank of Italy, would continue to deteriorate.
Problem loans more than doubled in Italy through 2007-2012, reaching 10.5 percent of total loans, Moody's said. It was one of the highest ratios in the euro zone.
Among the problems singled out by Moody's was the extensive use by Italian lenders of cheap European Central Bank funding for carry trade, which Moody's said it did not consider a sustainable source of income.
The rating agency also said that Italian banks do not have much room to improve efficiency as they have already been through several rounds of cost cuts. (Reporting by Lisa Jucca; Editing by Leslie Adler)
- Housing, jobs data weaken, but overall economic picture still upbeat
- Target cyber breach hits 40 million payment cards at holiday peak |
- 'Duck Dynasty' anti-gay fallout sparks debate on religion, tolerance
- UPDATE 3-Saab wins Brazil jet deal after NSA spying sours Boeing bid
- Zuckerberg to sell Facebook shares worth about $2.3 billion |