Moody’s said the more stable UK economy had improved the outlook for borrowers being able to repay debts.
The agency also said that there were encouraging signs of profitability in the sector whilst tougher capital and liquidity measures are making banks safer.
Moody’s said: “Although the UK continues to face the prospect of low medium-term economic growth, Moody’s does not expect a deterioration in the operating environment.
“Moreover, unemployment has not increased as much as in previous recessions, thereby contributing to a stabilisation in banks’ asset quality.”
However Moody’s warned that the UK continues to face the prospect of low medium-term economic growth.
