The impact of the corona crisis on Dutch banks is limited by measures taken by authorities to mitigate the negative consequences. Credit rating agency Moody’s reported this in a report on the Dutch banking sector.

Among other things, a sizeable support package has been announced for companies facing financial difficulties due to the crisis, while banks temporarily have to meet less stringent capital requirements.

“Together, these measures will mitigate the severe impact of the economic downturn on businesses and help mitigate the deterioration in bank loan portfolios. It will help ease liquidity pressures for businesses and prevent a sharp increase in corporate bankruptcies,” said Moody’s.

However, according to the credit rating agency, an increase in loan losses seems inevitable for banks. The final magnitude depends on the length of the crisis. Banks’ profitability will be undermined by a sharp decline in lending activity and lower commissions, the agency said.