Fitch: Asian banks doing well
Fitch Ratings has commented that with an easing but still strong outlook for economic growth in
“In Korea, the banks are achieving what Fitch hoped to see, sustaining good levels of profitability and capital,” said David Marshall, managing director and head of Asia-Pacific banking team at the agency’s Global Banking Conference in Tokyo.
“And while capital has fallen back a bit for some banks as loan growth picked up, it remains very satisfactory. Furthermore, despite concerns over sharply rising property prices in some parts of Korea, the high collateralization of property loans should very much limit any losses for the banks,” he added.
Turning his attention to
“The low lending rates help fuel the investment boom while the very low deposit interest rates encourage the stock market boom. Although they are reporting strong profits growth, Chinese banks face challenges over the medium term in dealing with disintermediation as the capital market in
Still on the topic of partially reformed banking systems, senior director Ambreesh Srivastava, commented that while the financial condition of Indian banks has improved with non-performing loan (NPL) ratios having fallen to new lows, the rapid growth of bank credit is somewhat concerning, particularly when interest rates have risen significantly over the past 18 months.
As a result, some deterioration in asset quality going forward is quite likely, particularly in the relatively unseasoned consumer segment which has also grown the fastest.
Nevertheless, on balance Fitch views such risks as manageable, and maintains a stable outlook on its ratings.
Also speaking at the conference, James Longsdon, senior director at Fitch’s banking team in
To add greater transparency and to ensure bank failure is consistently recorded, Fitch has added a sixth rating category to its individual rating scale.
Turning to European banks, Longsdon commented that conditions remain generally benign although organic growth in these mature markets remains a key challenge.
Large-scale European cross border mergers and acquisitions is not the only strategic option open to many of
Lastly, Kenneth Ritz, senior director at Fitch’s banking team in
However, he warns that earnings will likely remain constrained by pressured net interest margins, weakening credit quality, as well as an increasingly intense competitive market environment.
For all these reasons, he commented that further consolidation through mergers and acquisitions of US banks remain likely.
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