Moody's: 2017 outlook for banks in Asia Pacific negative

The US-based ratings agency, Moody’s Investor Service, published its latest report on the Asian banks outlook for 2017.

Key Quotes:

“The outlook for banks in Asia Pacific for 2017 is negative, because of the challenging operating conditions in the region, which will weigh on the banks' asset quality and profitability”

“Problem assets will rise from a generally low level, due to previous rapid credit expansion, elevated corporate and household leverage in some economies, the ongoing recognition of credit problems, and challenges in commodities and cyclical industries"

"Foreign private capital flows will remain volatile in emerging Asia, pressuring domestic currencies and weakening operating conditions for the banks"

"And, property price increases in parts of Asia Pacific will further amplify credit risk for the banks"

“In addition, the banks' generally strong profitability will continue to be pressured by higher credit costs”

“Nevertheless, Moody's points out that despite the overall negative outlook, downside risks for the banks are partly balanced by the banks' improving capital levels, as well as their strong funding and liquidity profiles”