Moody’s revises Cyprus banking system to stable

Moody's Investors Service said it changed its outlook for Cyprus’ banking system to stable from negative, reflecting the country's modest economic recovery, which will bring an end to five years of acute asset quality deterioration.

"Although Cypriot banks' massive stocks of problem loans will remain high and provision buffers low, we expect these stocks to begin to ease towards the end of 2016," Moody’s analyst Melina Skouridou said in a news release.

The stabilization of asset quality metrics will be underpinned by a declining rate of new borrower defaults as household income and business cash flows rise in line with growing economic activity, the agency said.

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