The negative ratings trend of Asia-Pacific's banks has improved slightly despite downside risks, according to S&P Global Ratings in its quarterly report published yesterday, titled “Asia-Pacific Financial Institutions Monitor Q3 2018.”
The net negative outlook bias across the portfolio of over 300 rated financial institutions across 20 Asia-Pacific countries is about minus 6 per cent as of May 31, 2018.
Although negative rating outlooks still exceed positive rating outlooks, the negative bias has improved from minus 10 per cent as of the end of the first quarter.
While macroeconomic and financing conditions continue to be favourable overall in Asia-Pacific, risks emanating from the US are increasing.
“The more prominent key risks that threaten Asia-Pacific financial institutions’ credit quality include high private-sector indebtedness, elevated property prices, and the potential for rising US interest rates,” said S&P Global Ratings credit analyst Gavin Gunning.