Relative rating stability across Asia-Pacific financial institutions sector is likely to persist into 2025 despite heightened uncertainties affecting operating conditions.
“Our base case assumes most Asia-Pacific governments support systemically important private sector commercial banks. We maintain that extraordinary support would be available for these banks in the unlikely event it is needed,” according to S&P.
“About 91 percent of bank ratings are on stable outlook, supported by our anticipation of strong government backing for most systemically important banks,” said S&P Global Ratings credit analyst Gavin Gunning.
“Banks are balancing a range of risks of varying intensity, including potential spillover from tensions in the Middle East, property market woes in numerous jurisdictions, and the overarching risk of an economic hard landing. Our base case, however, is that most banks will contend with these risks into the new year,” it said.
Most systemically important banks in Asia-Pacific currently benefit from modest rating uplift because of government support. Recent positive rating actions for some regional financial institutions stem from improved sovereign outlooks in select Asia-Pacific countries.
