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US banking outlook remains negative, Moody's reveals

Banks in the US are set to continue to face tough conditions over the next 12-18 months, a new report has indicated.

According to Moody's Investors Service's latest study on the American financial industry - which was published yesterday (4 September) - the country remains mired in financial difficulty, meaning the outlook for its banking system is negative.

Sean Jones, senior vice president at Moody's, explained that this stance reflects the "challenging domestic operating environment", which is characterized by "prolonged low interest rates, high unemployment, weak economic growth and fiscal policy uncertainties".

Mr Jones went on to say analysts are also wary of the prospect of contagion from the ongoing eurozone debt crisis, which would undermine the US recovery and expose banks to a "heightened risk of shocks".

Furthermore, even though most lenders are currently in recovery mode and have returned to profitability since 2010, Moody's noted that nonperforming asset levels within financiers are still high.

By Tony Aynsley