Moody’s revises Paraguay to stable

Moody's Investors Service said it returned the outlook on Paraguay's (Ba1 stable) banking system to stable from negative on expectations that capital levels will remain high and profitability will be strong, offsetting asset risk.

Factors including steady economic growth, stabilized commodity prices, moderate inflation and a stable currency are supporting the operating environment for banks. The agency forecasts that Paraguay's economy will grow 3.5% this year as a result of a bumper crop and growth in other industries.

"Profitability will remain strong this year and next, driven by a recovery in loan growth combined with low funding costs and strong pricing power," Moody’s analyst Farooq Khan said in a news release.

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