Moody's changes Poland's banking system outlook to stable from negative.

By bne IntelliNews November 12, 2010
The outlook for Poland's banking system has been changed to stable from negative, primarily reflecting the system's relative resilience to the global financial crisis and that it is poised to enter a more predictable and sustainable operating environment, credit-rating agency Moody's Investors Service has announced in a report. "The outlook change for the Polish banking system is based on Moody's view that the operating environment has stabilised, while asset-quality deterioration has slowed. Moreover, we expect the recovery in economic growth to continue in the near to medium term, which improves the outlook for the banks' earnings and capital generation," Moody's vice president-senior analyst Irakli Pipia was quoted as saying in the agency's release. However, Moody's also pointed to several risk factors . "From a macro-economic point of view there is a degree of dependence on its major European trading partners, and unemployment trends have not stabilised yet. Moreover, the volatility of the zloty, the most widely-traded currency in the Central European region, can affect the funding and hedging costs of banks. We recognise, however, that due to predominantly upward pressure on the currency in 2010, this risk has been less material for the banks, which was not the case in 2009 when the zloty weakened against major currencies," the document continues. Overall, however, Moody's considers that the Polish banking system entered the financial crisis with relatively healthy fundamentals compared with other regional countries, and sustained itself without the need for significant external recapitalisation or government-led bailouts, the agency concluded. tom

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