REUTERS
Moody's Investors Service has today changed the outlook for Ukraine's banking system to stable from negative.
“The change in outlook reflects our view that the economy will begin to emerge from a deep recession in the coming 12-18 months , which will help contain further asset quality deterioration,” reads the agency’s announcement published May 31.
According to the Moody’s estimates, improved funding conditions will “support core lending, and the local currency's recent stabilisation will help slow the decline in banks' solvency.”
Read alsoMoody's forecasts economic recovery in Ukraine in 2016-2017Moody's suggests Ukranian banks “have accumulated liquidity cushions which, as of year-end 2015, were large enough to cover 84% of cross-border debt service payments coming due in 2016 and a series of distressed debt exchanges that took place in 2015 shifted major wholesale debt repayments to 2018-19.”
However, Moody's notes that However, expected economic recovery will not likely be strong enough to reduce the stock of problem loans, which amount to 45% of rated banks' gross credit exposures in 2016. As a result, credit losses will remain high, especially when including losses that have been deferred in previous years to help slow the decline in capital.
As UNIAN reported earlier, Moody's international rating agency said it expected a resumption of economic growth in Ukraine in 2016 and 2017 after a cumulative real GDP fall of about 15% in the last two years, according to a posting on the agency's website.
Ukraine's GDP in 1Q 2016, according to operative data of the State Statistics Service of Ukraine, taking into account the seasonal factor, decreased by 0.7% compared to the previous quarter and rose by 0.1% yoy
The National Bank of Ukraine predicts real GDP growth in 2016 at 1.1% with the inflation rate of about 12%.
Read alsoNBU cuts key policy rate to 18%The International Monetary Fund, Ukraine's key creditor, has maintained its economic growth forecast for Ukraine in 2016 at 1.5% and inflation at 15.1%. The World Bank projects the Ukrainian economy will grow 1% and inflation will stay at 15%.
According to the expert consensus forecast compiled by UNIAN, Ukraine's economy will grow by 1% this year amid a 3% increase in industrial production and 19% inflation.