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Moody's raises outlook on Spain's banking system to positive from stable

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Moody's raises outlook on Spain's banking system to positive from stable

Moody's on June 12 raised the outlook on the Spanish banking system to positive from stable, driven by robust economic growth and disposals of troubled assets, which the agency said helped banks boost their asset quality.

The rating agency said it expects Spanish lenders' stock of nonperforming loans to continue to decline over the next 12 to 18 months, while the growing economy, which Moody's expects will support improved credit conditions for banks, will underpin a stable operating environment.

Moody's projects that banks' profitability will remain broadly stable over the next 12 to 18 months, with declining net interest income to be compensated by higher fee and commission income. The agency also expects capital, cost of risk, and funding and liquidity conditions to remain stable over the outlook period.