Aug 24 (Reuters) - Moody's-
* AUSTRIAN BANKING SYSTEM OUTLOOK LIFTED TO POSITIVE ON LOAN QUALITY, CAPITAL LEVELS
* RAISED OUTLOOK ON AUSTRIAN BANKING SYSTEM TO POSITIVE FROM STABLE AS IT EXPECTS LOAN QUALITY TO IMPROVE THROUGHOUT SECTOR, CAPITAL LEVELS TO RISE
* EXPECTS PROBLEM LOANS IN AUSTRIAN BANKING SECTOR TO FALL TO AROUND 5.0% OF GROSS LOANS BY THE END OF THE YEAR, DOWN FROM 5.6% IN 2016
* PROFITABILITY IN AUSTRIA'S BANKING SECTOR WILL REMAIN STABLE OVERALL; REDUCED BANK LEVY,LOW PROVISIONING NEEDS WILL SUPPORT EARNINGS THROUGH 2018
* AUSTRIAN ECONOMY TO CONTINUE TO PERFORM WELL, AND AFTER A PROLONGED PERIOD OF MODERATE GROWTH; FORECASTS GROWTH TO STRENGTHEN IN 2017 AND 2018
* WHILE RISING HOUSE PRICES POSE A TAIL RISK, THERE ARE CURRENTLY NO INDICATIONS OF OVERVALUATION IN AUSTRIA'S HOUSING MARKET