Moody's: Outlook for U.S. Banks Raised to "Stable"

NEW YORK (AP) -- Moody's (MCO 1.23%) Investors Services has raised its outlook for the U.S. banking industry for the first time in five years, citing the improving economy and banks' stronger balance sheets.

The rating agency said in a report issued Tuesday that sustained economic growth and a better jobs picture will help banks over the next 12 to 18 months. Moody's raised its outlook for the industry to "Stable" from "Negative." It had been "Negative" since 2008, the year the financial crisis struck.

Moody's said that after a year of reducing losses from soured loans and building cushions against losses, banks are in a better position to handle any future economic downturn.

It said the most likely scenario pushing the outlook back to negative would be a slackening of banks' credit standards.