Uruguay's banking system outlook receives a negative rating by Moody's, reports Healy Consultants

SINGAPORE - Aug. 5, 2016 - PRLog -- Last week Moody's, the renowned credit rating institution, lowered its outlook on Uruguay's banking system from stable to negative on anticipation of moderate rise in asset risks given the challenging economic conditions weighing on businesses and consumers alike.

The institution also expects profitability in the Uruguayan financial and banking market to decline in the near future.

Business and consumer confidence has also been undermined by recent decline in private investments in the country, coupled with the deterioration of Uruguay's agricultural sector as well as a declining demand from the country's regional trading partners like Brazil and Argentina.

Uruguay's banking system's ratio of problem loans rose from at least 2.1% in December of 2015 to 3.1% in May of 2016. Moody's forecast expects the ratio to rise over the next year and a half to a high of 3.6%.

"The weak economy will push up corporate loan delinquencies, while rising unemployment will lead to higher delinquency rates for consumers as well," said an Assistant Vice President – Analyst at Moody's, Alexandre Albuquerque.

With the rising competition, slowdowns in loan growth due to the weakening economy will ultimately exert downward pressure on profitability of banks in Uruguay.

As inflation becomes a key challenge for banks, revenue growth for domestic companies may also weaken given the softer consumer demand, that may undermine the corporate loan performance.

Currently Moody's rates two state-owned and four foreign-owned banks that hold at least 75% of Uruguay's banking system's total deposits, as well as other financial institutions and offshore banks in the country.

Healy Consultants is a professional corporate services provider headquartered in Singapore and with a presence in Uruguay since the year 2003. The company helps global entrepreneurs looking to establish their international businesses in different sectors of the economy with, among others, company registration, tax and vat registration, assistance with obtaining business licenses and official business addresses, opening a corporate and merchant bank account and obtaining work or residence visas.