Moody's moves UK banking sector from negative to stable

11 July 2013

The outlook for the UK banking sector has now been classed a stable by Moody's Investors Service.

The report, entitled Banking System Outlook: United Kingdom, upgraded the country from negative and reflects its improving economic outlook despite the low growth prospects.

Consequent boosts in asset quality and a better capital ratio, which have been partially driven by more stringent capital requirements, were also listed as reasons for the update.

The ratings agency expects profitability to recover from its very low levels but said it will continue to be pressured by low interest rates, the increasing costs of regulation and a heightened level of conduct-related scrutiny, which could lead to additional one-off charges.

Regulation has been a major talking point for the banking sector, but Moody's believes in the long term the systemic risk will be reduced by the higher capital requirements, which will help in areas such as loss-absorption and counter-cyclical capital buffers.

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development