Moody's: Poland's banking system outlook remains negative.

By bne IntelliNews October 18, 2012
The outlook for Poland's banking system remains negative for the second consecutive year, according to a report by Moody's Investors Service. The main drivers of the outlook are (1) the slowdown in economic growth in Poland; (2) the consequent asset-quality deterioration and constrained ability to grow and diversify revenues; and (3) banks' potential exposure to a significant asset-liability mismatch risk, particularly in foreign currency, the agency said. In addition, Moody's expects that the increasingly volatile and uncertain external environment and encouragement from West European parents will push Polish banks to accumulate liquidity and intensify competition for customer deposits, thus diminishing their interest margins. It notes that the slowdown in economic growth has placed banks' performance under pressure by weakening credit demand and reducing "bankable" lending opportunities in Poland. Moody's says that weak demand is likely to persist in 2013 as the rating agency expects GDP growth to remain subdued at 1.7%.
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