The rating agency Moody’s lowered the outlook on the Italian banking sector to negative from stable. The operating conditions that will further deteriorate in the next 12-18 months have an impact, weakening the quality of loans, profitability and accessibility to bank loans.
“We expect Italian GDP growth to drop to 0% in 2023 compared to 2.7% forecast for 2022, affected by the impact of the military conflict in Ukraine, the energy crisis and high inflation.” Moody’s wrote in a note.
On the other hand, the outlook on banks in Austria and the United Kingdom remains stable because according to the rating agency, the capital is solid and the improving margins of these institutions will offset the pressures coming from the macroeconomic headwinds.
“We have changed the negative outlook for six banking sectors because we foresee a further deterioration in operating conditions, with a weakening of the quality of credit, profitability and access to financing of banks, although the impact will vary from country to country”, said Louise Welin, Moody’s VP-Senior Credit Officer, who fears the formation of new problem loans.