The international credit rating agency Moody's said Friday it has upgraded its outlook for Germany's banks as they have improved their financial strength and stemmed their losses.
"The outlook for Germany's banking system, which has been negative since April 2008, has been changed to stable," Moody's said in a new report.
"The outlook change reflects that, following a year of reduced crisis-related losses and improved capital strength, German banks are now more able to withstand shocks," it said.
The improved outlook took into account a number of factors, the credit rating agency argued, including prospects of a stable operating environment due to an improving economy and benign credit environment.
Banks had also continued to strengthen their capital buffers due to more stringent capital requirements, a reduction in high-risk assets and de-leveraging, and improved refinancing structures and ample liquidity buffers, it said.
"Moody's expects that economic conditions in Germany will be mildly positive and therefore supportive for German banks," it said.