Moody’s downgrades banking sector rating

Moody's Investors Service has downgraded the rating on the Czech banking sector from stable to negative as it expects the quality of assets and banks' profitability to worsen sharply, the international rating agency said in a report sent to the CTK news agency. After years of strong and stable GDP growth, the pace of the Czech economy slowed to 3.1 percent in 2008 and, according to estimates, should register a 3.5 percent fall in 2009. Moody's analysts said the quality of the banks' assets in general has remained high but there has been a certain worsening and Moody's predicts the level of unpaid loans will grow sharply in the short to medium term.