**[Moody's: Outlook for China's Banking System Adjusted to Stable]** Golden Finance reported on June 25 that Moody's has adjusted the outlook for China's banking system from "negative" to "stable." Sustained policy support and robust economic growth have laid a solid foundation for the operating environment of banks. Moody's noted that asset risks in China's banking sector will remain elevated, primarily due to risks associated with financing rapidly developing industries, which require time to be tested, as well as rising asset risks within banks' retail business portfolios. However, banks' profitability is expected to stabilize as they demonstrate greater discipline in reducing deposit costs, keeping the contraction of net interest margins within a relatively small range. Moody's stated that credit costs may remain high due to risks associated with the formation of new non-performing loans, and investment returns could continue to fluctuate if market interest rates rise. Benefiting from a slowdown in loan growth, capital levels are expected to remain broadly stable. Moody's further stated that, given the stable outlook for China's sovereign rating, which reflects its strong support capacity, the government's support for banks has shifted from "deteriorating" to "stable."