Banking System Outlook - Germany: Slowing economy and rising profitability challenges drive our negative outlook
21 Nov 2019|Moody's Investors Service
The profitability and overall creditworthiness of banks in Germany will weaken over the next 12 to 18 months as ultra-low interest rates continue to exacerbate difficult operating conditions in the system. Commercial banks and deposit-funded institutions, in particular, will struggle to out-earn their costs even with loan loss provisions at unsustainable lows.
Moody's Investors Service
We maintain a stable outlook on the US life insurance industry as strong capital levels, a focus on adapting products to a low interest rate environment, and investment in technology counterbalance the headwinds of lower interest rates and heightened risks to the US economy.
19 Nov 2019|Moody's Investors Service
Low rates are once again the key risk facing insurers globally, after bond yields fell again during 2019 from already subdued levels. With a low for longer scenario now more likely, life insurers, facing added pressure on their investment income and economic solvency, will be forced to accelerate their shift to a less interest rate-sensitive business model.
Banks – Europe: ECB's introduction of deposit tiering system will mitigate effect of low interest rates on EU banks’ margins
13 Sep 2019|Moody's Investors Service
The introduction of the tiering system on banks’ excess liquidity placed at the central bank is credit positive because it will reduce the cost of holding liquidity at the ECB, providing a partial offset. We expect that the tiering mechanism will be particularly positive for banks with material excess liquidity.
Financial Institutions – US: Continued low interest rates will alter firms' behavior, encourage more risk-taking
12 Sep 2019|Moody's Investors Service
The past decade of low interest rates and the expectation that the low rate environment will continue for some time will have a large impact on the financial strategies of US bank and non-bank financial institutions and will encourage more risk-taking.
Real Estate – Europe: Low rates ease credit quality pressure despite slowing economy, yield concerns
05 Sep 2019|Moody's Investors Service
Despite slowing economic growth and very low property yields, continued low interest rates will prevent sector wide property value and credit quality declines in the next 12-18 months. Values will not fall uniformly across asset classes and countries as property yields widen, and low interest rates mean yields are unlikely to widen and values to decline substantially until 2020 or even 2021