Banks' financial profiles will continue to strengthen globally in 2015: Moody's

NEW YORK: The standalone creditworthiness of banks across the globe will continue to stabilize in 2015, according to Moody's Investors Service in its just-published report "2015 Outlook - Global Banks: Economic Challenges and Regulatory Reforms Continue to Test Stability." At the same time, the number of negative banking system outlooks has risen, primarily reflecting the potential for a decline in systemic support, particularly in Europe. Globally, banks will continue to make progress in restoring their financial fundamentals. However, the economic recovery hasn't been uniform; in some countries it remains fragile, leaving their banking systems more vulnerable to unexpected shocks. Furthermore, interest rates, which remain at historically low levels, are set to rise in the US, pressuring asset quality, while burgeoning regulatory requirements will raise costs, at banks across the globe. "The story for banks globally in 2015 derives directly from the low-growth economic environment, with ongoing pressure on asset quality and earnings, and the global regulatory agenda," says Greg Bauer, a Moody's managing director. "We expect banks to be challenged by these issues but to continue the progress they have achieved to date in strengthening their financial profiles." the Update, and 5.1% in 2015, down from 5.3%.

The slowdown in the Russian Federation is weighing on growth in Kazakhstan and other Central Asian economies. Reduced remittance flows and muted external demand are undermining growth in Armenia, the Kyrgyz Republic, and Uzbekistan. The aggregate growth projections for Central Asia are revised down to 5.1% from 5.6% for 2014 and to 5.4% from 5.9% for 2015. The Pacific economies are expected to accelerate to 13.4% growth in 2015, led by a burst of output in Papua New Guinea as it enters its first full year of liquefied natural gas exports. The subregion is forecast to grow 5.4% in 2014, modestly higher than expected in the Update as prospects have improved in some economies including Fiji, Solomon Islands, and Palau.