Amid moderate growth, most banks in the Asia Pacific will see cyclical pressures in asset quality next year, despite stable bank ratings in most economies, ratings agency Fitch said Thursday.
There has been a rapid build-up of private-sector debt, including corporate and household debt, in a number of Asia Pacific economies since 2009, and the vulnerabilities that this has created will continue to be tested in 2017, Fitch said in its latest report.
However, "earnings and capital buffers are generally strong enough to withstand these trends," the report said.
Fitch expects economic growth in emerging-market Asia to ease pace to 6.4 percent in 2017, still faster than other regions but down from an average of 7.8 percent between 2010 and 2014. Low commodity prices are creating financial problems in the resources sector, and other challenges faced by banks included very low or negative interest rates, it said.
The strength of the dollar will hurt exporters in the region and make it more difficult for borrowers to service dollar-denominated debts, it added.
The outlook on bank ratings was stable for the majority of banking systems in this region, Fitch said.
Latest comments