Moody's Investors Service on Wednesday announced that it has changed its outlook on the Peru and Brazil banking systems to stable from negative.
This change comes in light of an improving operating environment over the next 12-18 months.
At the same time, the credit-rating agency has maintained its negative outlook on Mexico and Chile.
"The outlook changes to stable from negative for the Brazilian and Peruvian banking systems follow Moody's expectation of recovering economies that will support operating environments and banking business in 2021-22," says Felipe Carvallo, a Moody's Vice President Senior Credit Officer.
In Peru, the expected rebound in economic growth and ample support packages will aid local banks' asset quality and boost profitability.
Moreover, strong liquidity and solid core deposit funding will continue to support Peruvian banks' financial profiles in 2021.
Still, deterioration in social indicators, populist measures, and further delays in vaccine rollouts add to banks' risk aversion, which will lead to low loan growth in the long term.
"The negative outlook for Mexican and Chilean banks reflects the strong linkages between the creditworthiness of the sovereigns and banks. Moody's currently assigns negative outlooks to the government ratings of Mexico and Chile," Carvallo added.
(END) NDP/RMB
Published: 3/24/2021