Thai banks show resilience: moody's

The rating agency said Thai banks were showing strong resilience to politics.

"In the case of the negative industry outlooks, common reasons include the global economic slowdown and rising inflation, and the consequent impact on operating environments," said senior vice president Deborah Schuler. "Inside Indonesia, there is a sense of déjà vu as the banks face macroeconomic conditions similar to those prevalent in late 2005, when the government lifted fuel subsidies.

"With the stable outlooks, a wide range of factors are in play. In Cambodia, public confidence in the banking system is recovering; in the Philippines, the system continues to enjoy the benefits of structural reform; while in Thailand, the banks are showing again a strong resilience to political risk."

In terms of sub-prime-related exposures, these have been small and banks in the region have managed to keep losses well contained within their strong earnings, the Moody's report says.

Looking ahead for the region's banking industries, the coming 18 months will mean slower loan growth and a moderate increase in non-performing loans (NPLs), currently at cyclical lows, the report says. If irrational competition does not interfere, the higher cost of funds will be passed through to borrowers and the banks will be better able to earn the risk premiums they deserve in most markets.

Moody's Investors Service says the industry outlooks for the banking systems in Southeast Asia are mixed, but overall the impact of the tightening global credit markets has been moderate.