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Moody's keeps stable outlook on LatAm banking system in 2020

Moody's on Dec. 11 said it maintains a stable outlook for the Latin American banking system in 2020, driven by high profitability, contained asset risk and quality funding.

"Drivers of the stable outlook include improving, though modest, economic growth, which will exceed 2019 levels and will support largely stable asset risk," Moody's Assistant Vice President Marcelo De Gruttola said in a statement.

"LatAm banks' margins and overall profitability will remain stronger than global peers despite pressure from low interest rates. Ample core deposit funding and adequate liquidity reduce banks' exposure to market volatility," he added.

However, banks will face potential external shocks as well as sociopolitical tensions and policy changes that could erode confidence, Moody's said.

The rating agency also expects the presence of financial technology companies to remain small despite their recent surge, with banks implementing their own digital innovation strategies.