Moody’s credit rating agency has become more positive about the Italian banking system. The company has adjusted the expectation from ‘negative’ to ‘stable’. Banks have fewer and fewer problem loans and are able to hold on to better capital. Moreover, the financing conditions have improved.

“We expect a decrease in the number of problem loans in 2020 for the fifth consecutive year,” says Fabio Iannò of Moody’s in a statement.

Italian banks still have a long way to go in this regard. Around 8 percent of Italian loans are considered problematic, where the average in the European Union (EU) is 3 percent.

Moody’s also adjusted the assessment because the company expects the Italian economy to remain stable and even grow slightly. According to the credit rating agency, Italian banks will become more profitable in 2019 and 2020, partly because they will become more efficient due to recent reorganisations. The capital buffers are also expected to remain stable.