A-Pac bank provisioning set to remain elevated in 2021: Fitch

ANI
01 Oct 2020, 11:25 GMT+10

Singapore, October 1 (ANI): Provisioning levels will remain elevated across Asia Pacific (A-Pac) banking sectors in the second half of this year and 2021, according to Fitch Ratings.

The lingering effects of the economic downturn prompted by the coronavirus pandemic will strain borrowers' repayment capacity in many regional markets, particularly as authorities withdraw support and forbearance measures.

Annualised credit costs across 79 of the largest Fitch-rated banks in A-Pac increased to an average of 1.26 per cent of gross loans in 1H20 from 0.84 per cent in 2019. The rise was more marked in emerging markets.

This may reflect the magnitude of policy responses and relative impact of the pandemic economic shock in the region's developed markets as well as banks' superior risk management in these jurisdictions. However, it could also signal under-provisioning in some cases.

Indian banks reported a drop in 1H20 credit costs relative to 2019, making the country a notable exception among A-Pac markets. Fitch said India's provisioning seems at odds with the scale of its economic contraction which is likely to be among the steepest in the region.

"This may reflect India's incurred-loss accounting approach and banks' limited capital buffers to absorb credit losses as well as extensive forbearance. However, we also believe that problem loans are likely being under-reported and under-provided for."Widespread use of forbearance makes it harder to assess which banks are being more or less conservative in their response to asset-quality pressure. Profitability and asset-quality metrics are likely to be distorted should a bank's reporting of expected credit losses not factor in the full impact from the pandemic shock, said Fitch. (ANI)

Watch latest videos

News RELEASES

Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Asia Pacific Star.

More Information

null in null

Asia

Section

President Droupadi Murmu graces convocation ceremony of AIIMS, Bhubaneswar

New Delhi [India], July 14 (ANI): President Droupadi Murmu, graced the fifth convocation ceremony of AIIMS, Bhubaneswar, at Bhubaneswar,...

CM Mohan Yadav woos global investors for Madhya Pradesh in UAE

Dubai [UAE], July 14 (ANI): Madhya Pradesh Chief Minister Mohan Yadav, currently on an official visit to the UAE as part of the MP...

MP CM Mohan Yadav meets UAE Chambers Secy General, promotes bilateral investment opportunities

Dubai [UAE], July 14 (ANI): Madhya Pradesh Chief Minister Dr Mohan Yadav met industry leaders in the UAE's trade sector during his...

(SP)CHINA-SHENZHEN-BASKETBALL-FIBA WOMEN'S ASIA CUP-JAPAN VS THE PHILIPPINES (CN)

(250714) -- SHENZHEN, July 14, 2025 (Xinhua) -- Tanaka Kokoro (R) of Japan competes during the Group B match between Japan and the...

MoS Margherita emphasises need for early completion of review of ASEAN-India Trade in Goods Agreement

New Delhi [India], July 14 (ANI): Minister of State for External Affairs Pabitra Margherita, during his recent Malaysia visit, emphasised...

"MP is committed to increasing religious tourism": CM Mohan Yadav during Dubai visit

Dubai [UAE], July 14 (ANI): Madhya Pradesh Chief Minister Mohan Yadav, currently on an official visit to the UAE as part of the MP...

Business

Section