Moody's upgrades Russian banks rating to 'stable'

12th October 2010, Comments 0 comments

Ratings agency Moody's said on Tuesday it had upgraded its rating for Russia's banking system from negative to stable after the system benefited from state help during the financial crisis.

"The outlook change to stable for the Russian banking system is based on Moody's view that the fundamental credit conditions within that system have become more sustainable following the recent financial crisis," Moody's analyst Eugene Tarzimanov said in a statement.

"We expect slow, but positive economic growth to continue in the near- to medium-term, which will improve the outlook for the banks' asset quality and profitability," he added.

The statement said that "substantial state and central bank support was crucial in stabilising the banking system during the crisis."

But it also noted that "the Russian banking system remains weak in a global context" due to, among other factors, its vulnerability to external shocks.

Russia's banking sector was badly hit by the crisis. The volume of bad loans made by banks rose sharply as the country's hydrocarbon-dependent economy suffered a 7.9-percent economic contraction last year.

© 2010 AFP

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