Forget Deutsche Bank losses – outlook for German banks has improved, says Moody’s
Moody’s has upgraded the outlook for Germany’s banking system from negative to stable – despite its biggest bank, Deutsche Bank, saying last night that it will lose over €6.2bn (£4.6bn) in the third quarter.
The ratings agency said the move “reflects the removal of uncertainty surrounding government support following the introduction of a banking resolution framework in the country.
“German banks are benefiting from increasingly stable operating conditions,” Moody’s added, noting its GDP forecasts of one to two per cent this year and 1.5 to 2.5 per cent in 2016. It also expects unemployment to remain low at between four and five per cent.
“The main challenge over the outlook period will be to maintain steady profits in an environment of persistently low interest rates, margin erosion and high costs.”