Moody's changes its outlook for Spain's banking system to positive from stable as it sees robust economic growth and disposals of troubled assets helping to improve the banks' asset quality.
Other fundamentals including capital, funding and liquidity levels and profitability will remain stable, Moody's Investors Service says.
Economic growth should continue a multi-year decline in unemployment and support improved credit conditions for Spanish banks, Moody's said. While Spain's economic growth is expected to slow to 2.7% in 2018 and 2.3% in 2019, it's still among the fastest growing in the euro area.
"The stock of non-performing loans at Spanish banks will continue to decline on the back of a growing economy," said Alberto Postigo, a Vice President and Senior Credit Officer, at Moody's. "Asset quality will be further improved by the large sales of troubled assets on which several Spanish banks are embarking."
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