The increase in the provisions of Italian banks linked to potential credit losses risks negatively impacting the ratings assigned to them. It is what was stated by Moody's in the weekly report dedicated to the Credit Outlook.
In its weekly report on the credit sector, Moody's notes that many large Italian banks recorded an increase in their credit losses ranging from 19 to 49% in the first half compared to the same period last year. For the country's two largest banks, Intesa Sanpaolo and UniCredit, these figures are 37% and 24%, respectively. Moody's estimates that the deterioration in bank asset quality is likely to continue throughout 2013.
"This - underlines the agency - is proof of the deterioration in the quality of the assets of banks in Italy, already back in recession, which negatively affects their already low profitability".
"Furthermore, the reduction of the financial leverage of the banks - notes Moody's - which is now committing the banks, will have to continue for a long time, also due to the financing problems of these, putting further pressure on the economy". Moody's downgraded 13 Italian banks, including UniCredit and Intesa Sanpaolo in July, following the downgrading of the rating of the Italian state. The agency assigns a "Baa2" rating to Italy with a negative outlook, due to the situation in the euro area and the risk of contagion from Spain and Greece.
