Moody’s says Greek banking system outlook remains stable

Moody’s on Monday said it maintained a stable outlook on the Greek banking system for the next 12-18 months. In an announcement, the credit rating agency said the outlook reflected Moody’s expectations of a small improvement in profitability and the quality of loan portfolios of Greek banks in 2017-2018, balanced by a still very high NPL problem.

Non-performing loans remain a big challenge for Greek banks, but we expect they will begin declining from around 45 pct of gross loans to around 40 pct by the end of 2019, Moody’s said, adding that Greek banks will face a significant challenge in achieving the goal of reducing NPEs (non-performing exposures) by around 40 pct by the end of 2019.

The credit rating agency noted that the operating environment for Greek banks will remain challenging and highly contingent on the government’s ability to get funding from creditors in a timely manner and noted that their dependence on central bank funding was likely to remain high, as the political and economic landscape remained fragile.