Negative outlook

Moody's changes outlook on banking system to negative from stable

International ratings agency Moody's Investors Service revised down its outlook on Lebanon's banking system to negative from stable.

The agency attributed its negative outlook to downside economic risks from regional political uncertainty, mainly in neighboring Syria, as well as slower economic growth in the first half of the year. It also said that the banks' asset and loan exposures to other regional countries experiencing political unrest or economic slowdown, such as Egypt and Jordan, were among credit risk drivers.

The agency expected a higher rate of non-performing loans on the backdrop of weakened domestic operating environment conditions, and the material exposures of banks (predominantly the larger ones) to regional countries suffering unrest.

The rating agency also expected the banks' profitability to come under pressure.