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S. Africa Banks’ Outlook Cut
World Economy

S. Africa Banks’ Outlook Cut

Moody’s Investors Service cut the outlook for South Africa’s banking system from stable to negative, just weeks after the agency affirmed its rating for the country, News24 reported. This blow to a key sector of the economy comes a week before Standard & Poor’s is set to release its latest assessment. Moody’s said the change in its assessment reflected its view that the major local banks’ creditworthiness was likely to come under pressure in the next 12 to 18 months. “Our negative outlook for the banking system is consistent with the current negative outlook on the government rating and on the large banks’ ratings,” Moody’s said. “The change in outlook is mainly due to the deteriorating operating conditions, which will challenge banks’ asset quality and profitability,” the agency said. Another factor that drove the change in outlook was the expectation that the government’s capacity to support any of the banks was likely to deteriorate in the future.

 

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