Moody's: Outlook on Belarus's banking system is negative

Moody's Investors Service confirms the negative outlook on the banking system of Belarus.

The outlook has been remaining negative since 2009, Interfax cites the agency's report.

“Belarus's negative banking system outlook reflects the anticipated further weakening of the country's operating environment, further deterioration in asset quality and capital adequacy, low foreign-currency liquidity relative to high levels of foreign-currency deposits and further worsening in profitability. It also factors in the government's limited and potentially weakening ability to extend support to the banks,” Moody's says.

Analysts expect the country's already weak operating environment for banks to face further deterioration in 2015 due to economic contraction and external pressures, which largely stem from the recession in Russia, Minsk's largest export market.

“Banks' asset quality and capital adequacy are also likely to worsen, with the economic slowdown and recent sharp depreciation of the Belarusian ruble having negatively affected the ability of many corporate borrowers to service their loans,” the report notes.

According to the report, Belarusian banks lack sufficient liquid foreign-currency assets to cover their large foreign-currency deposits (57% of total deposits).