Bangkok--14 Jun--Fitch Ratings
Fitch Ratings concluded the Asia-Pacific leg of its 2012 Global Banking Conference in Sydney today following successful stops in Hong Kong and Singapore. The event highlighted key issues including the eurozone debt crisis, growing credit and funding challenges in China, and rising credit risk in emerging Asia.
Bridget Gandy, Co-head of Europe, Middle East and Africa Financial Institutions, said, "Ratings for European banks have been coming down. On the broader scale, the downgrades include adjustments reflecting the review of the world's largest banks last year. But as the crisis in Europe plays out and uncertainty around the euro prevails, Fitch has taken further actions on banks in the struggling south of the region. The mass downgrades of Spanish banks earlier this week follow on from the downgrade of the sovereign to 'BBB' last week."
Mark Young, Head of Asia-Pacific Financial Institutions, said, "Fitch is becoming more cautious about the outlook of Asian banks due to early warning signs of asset deterioration in key financial systems across Asia. It is important to monitor any spillover effects from China's slowdown and problems with Chinese banks. However, non-performing loan ratios for key banks of most of emerging Asia are near historical lows and the loss absorption features, except those in China, remain robust."
Charlene Chu, Head of China Financial Institutions, said, "Chinese banks are contending with a growing list of challenges, including the aftermath of an unprecedented credit boom, weakening economic growth, and accelerating financial liberalisation. These will increasingly weigh on Chinese banks' profits and capitalisation. The next couple of years are likely to be difficult. If slowing economic growth leads to significant asset quality deterioration, government support could be required for some banks."
The impact of Europe's debt problems on Asian economies was a major discussion topic at the conference. Andrew Colquhoun, Head of Asia-Pacific Sovereigns, said, "Prospects for emerging countries in Asia to overcome challenges from the euro debt crisis and rapid credit growth at home will hinge on the appropriateness and timeliness of policymakers' response."
The Global Banking Conference series started in New York in May. The nine-city tour will conclude in Frankfurt on 28 June 2012.