Credit ratings agency Moody’s has upgraded its outlook for the UK banking industry to stable from negative.
It said the change reflected the country’s increasingly stable economic outlook, despite low growth prospects.
“Unemployment has not increased as much as in previous recessions, thereby contributing to a stabilisation in banks’ asset quality,” the statement said.
Moody’s expects profitability to recover from current low levels.
Other reasons given for the more positive outlook were the continued improvement in the banks’ capital as a result of new, stricter regulation.
“Overall, we believe that UK banks are sufficiently well capitalised to absorb expected losses from both our central and adverse stress scenarios,” Moody’s said.
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