Moody's: Israel banks improving

The fundamental credit outlook for the Israeli banking sector is stable, reflecting expectations of healthy domestic economic growth in 2010 following a shallow contraction in 2008 and 2009, Moody's Investors Service said in a new report.

The stable outlook reflects the likely future direction of fundamental credit conditions in the sector over the next 12 to 18 months, Moody's said.

Israeli banks' modest direct exposure to the global financial crisis, sound liquidity profiles and adequate capitalization meant that financial performance recovered in 2009, the agency said, despite a moderate increase in provisioning expenses.

Some asset quality pressures are likely to persist in 2010, but Moody's said it expects the overall credit environment and bank financial performance to continue to improve over the year.

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