Moody’s downgrades outlook for banks in Germany, Italy and elsewhere

FRANKFURT, Nov 2 (Reuters) – The ratings agency Moody’s said on Wednesday that it had downgraded the outlook for banks in Germany, Italy and four other countries to “negative” from “stable” as the energy crisis and high inflation weaken economies.

The downgrade also affects banking sectors in the Czech Republic, Hungary, Poland and Slovakia.

“We expect operating conditions to deteriorate further,” Louise Welin of Moody’s said.

European banks’ shares .SX7e have fallen nearly 25% from their highs before Russia invaded Ukraine earlier this year.

Moody’s said it expected weaker bank loan quality, profitability and access to funding.

“Rising prices will affect the creditworthiness of many businesses and households, triggering the formation of new problem loans,” Welin said.

The outlook for British and Austrian banks remained stable, Moody’s said.

(Reporting by Tom Sims, editing by Rachel More)