Moody’s maintains negative outlook on Greek banking system

The outlook for Greece's banking system remains negative, says Moody's Investors Service in a new report published today.

This reflects Moody's view that the stressed operating environment, characterized by prolonged economic contraction, will continue to erode banks' asset quality, capital, profitability and funding.

According to the report, the deep economic contraction will further increase already high levels of non-performing loans, applying additional pressure on the stressed banking system.

Moody's expects that non-performing loans will likely exceed 30% of gross loans by the end of 2013, as the banks will remain loss-making in 2013/2014. Moody's believes that in the wake of developments in Cyprus, depositors' confidence will remain highly vulnerable to any negative political or economic developments.