BAKU, Azerbaijan, April 27. European banking systems will continue to recover from the COVID-19 pandemic shock, however, at a slower pace, Trend reports via the outlook from Moody’s Investors Service.
Due to the hostilities between Russia and Ukraine the increase in inflation and supply chain disruptions will likely be observed, so the recovery will likely be maintained over the next 12-18 months, said the report.
According to the report, the forecast for most European banking systems, such as of Austria, the Czech Republic, Finland, Hungary, Ireland, Poland, Portugal, and Slovakia is stable.
“The outlooks of the Baltic countries (Estonia, Latvia, and Lithuania) are negative, as the Ukraine crisis and consequent sanctions against Russia will lead to higher inflation and slower economic growth,” said the agency.
The forecast for Greece remained positive despite inflationary pressures alongside with complicated economic conditions.
“Greece's banking system is likely to constrain economic growth in 2022, but with a likely pickup in activity in 2023. Greek banks still have the capabilities to fully implement their plans to reduce exposure to nonperforming loans, which would further improve their asset quality,” the report said.
Meanwhile, Moody’s has upgraded Norway's banking system to positive from stable, as the country’s will carry on with the post-pandemic recovery with proactive interest rate increases by the central bank helping to offset supply chain disruption and inflationary pressure caused by the conflict in Ukraine.
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