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Moody’s sees mixed industry outlooks for SE Asian banks
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. At the same time, the rating outlooks for
these same banks is generally stable and, for a handful, actually positive.
“A number of mitigating factors will serve to cushion the impact on the
banks of the current credit crunch, the sub-prime crisis, slowing global
economies, and rising inflation,” says Deborah Schuler, a Moody’s Senior
Vice President.
“Primary among them are the strong underlying growth rates of the Asian
economies, the very limited involvement of most regional banks in the global
capital markets, and their generally healthy financial conditions as they
face this difficult economic period,” says Schuler.
Schuler’s assessment is contained in the latest version of Moody’s annual
Asia Banking Outlook, which looks at a total of 15 regional systems, and has
been put together by Moody’s Financial Institutions Group for Asia Pacific.
Specifically, Indonesia, Malaysia, Singapore and Vietnam face negative
industry outlooks, while Cambodia, the Philippines and Thailand have stable
outlooks.
“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,” says Schuler. “Inside Indonesia, there is a sense
of deja vu as the banks face macro-economic 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,” says
Schuler. “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 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.
The report, entitled “Asia Banking Outlook 2008”, can be found at
www.moodys.com
Thai investors can trade on foreign bourses on July 22
Thai investors will be given an opportunity to test direct
trading in leading international stock markets on July 22, according to a
securities executive.
Phillip Securities (Thailand) president Suchai Suthatthammakul revealed last
week that the company is in the process of testing the new trading system.
The proposed channel would allow Thai investors to begin trading directly and
formally in eight foreign stock markets of six countries for the first time.
Included are three key US markets and five bourses in the United Kingdom, Japan,
Hong Kong, Singapore and Malaysia.
“Investing in foreign stock markets is considered an investment diversification
and risk management, particularly when the local stock market experiences a
fluctuation,” Suchai explained. “In the past, Thai investors were given no
chance to do that,” he added. (TNA)
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