Moody’s Warns on Outlook for Global Banks, Citing Trade Tensions

(Bloomberg) --

Moody's Investors Service downgraded its outlook for global banks, citing slowing growth, low interest rates and volatile operating conditions.

The ratings firm changed its outlook on the sector to negative from stable, it said in a report published Thursday.

Trade tensions between the U.S. and China “appear entrenched, with negative consequences for banks in those countries as well as in other export-oriented economies and for banks funding trade,” Moody's said.

Moody's said a rising recession risk in the U.S. and Europe, along with slowing growth in Asia Pacific and emerging markets, “will lead to deteriorating loan quality and higher loan-loss provisioning costs for banks.” Political risk will also be a significant source of uncertainty, it added.

The gloomier global view comes after Moody's cut its outlook on British lenders to negative from stable earlier this week.

To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, James Hertling

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