U.K. banks are poised to see their revenues and profits drop and bad loans rise as the fallout from the Brexit vote starts to take a toll on the economy, Moody’s Investors Service warned in a report on Wednesday. The ratings agency said weaker economic growth in Britain is likely to hamper the banks’ asset quality as well as weaken credit demand on the back of heightened uncertainty following the vote. “Increased uncertainty about the U.K.’s future trade relationship with the EU will likely lead to reduced confidence and lower investment and consumer spending in the U.K.,” said Carlos Suarez Duarte, senior vice president at Moody’s. “This will, in turn, pressure revenues, asset quality and profitability metrics for all banks in the U.K., though some are more resilient to these pressures than others,” he added. Moody’s on June 28 changed its outlook on the U.K. banking system to negative from stable.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.