Moody’s has downgraded the outlook for the banking systems of Greece and Cyprus from ‘Positive’ to ‘Stable’ due to economic disruption caused by the coronavirus outbreak. The ratings agency wrote that the profitability of Greek banks would be negatively impacted by the economic environment and that its non-performing exposures would remain at high levels – around 40 percent of gross loans. However, it wrote, “Greek government support measures include additional liquidity and working capital facilities for businesses, which will help slow new NPE formation, as will extended loan repayment periods for banks’ more vulnerable customers.” It warned that strict travel restrictions would hurt the country’s tourism sector, which is responsible for 12 percent of GDP.
