Sao Paulo, Nov 7 (EFE) .- The risk rating agency Moody's raised today the perspective of the Uruguayan banking system from negative to stable given the better credit conditions and the economic recovery of the country.

Moody's believes that the banking sector in Uruguay will be supported "by a higher yield of agricultural production, as well as by moderate economic recovery of Brazil and Argentina, "the agency said in a statement released in Sao Paulo.

With these factors, Uruguayan banks should have" a moderate improvement in the asset quality, profitability and capital, "adds the note.

The rating agency projects an expansion of Uruguay's gross domestic product (GDP) of 3.2% in 2017 and 2018, After averaging a slight advance of 1% in the two previous years.

It also says to expect "inflation to fall to 6.4% in 2017, compared to 11% observed in May 2016," he said. the US firm.

Moody's qualifies for analysis six banks in Uruguay that last June owned 74% of the deposits and credits of the entire banking sector.

"There will be a slight improvement in profitability as banks focus more on higher margin credit and credit costs decrease, although this improvement will be offset by low business volumes, "said Moody's analyst Alexandre Albuquerque, quoted in the note.

According to the firm, the quality of assets will also experience an improvement after suffering a deterioration in 2016, while the capitalization will maintain high levels.

For the agency, depositors continue betting on the dollar, despite the recent appreciation of the peso, which limits banks' access to financing in local currency and, as a consequence, restricts their ability to grant loans in pesos.

The average of the Baseline credit risk assessment of the rated banks is b1, but that of the deposits is Baa3, which reflects, according to Moody's, "a very high level of government support towards both state banks "and affiliates" to foreign banks that are in the country. "