Moody’s: Banks likely to keep ratings
By Michelle Remo
Philippine Daily Inquirer
First Posted 03:15:00 11/05/2008
Filed Under: Banking, Ratings, world financial crisis
US-based credit watchdog Moody’s Investor Service expects banks in the Philippines and the rest of Asia to feel the pinch of a global economic slowdown but remain strong enough to maintain their credit ratings.
“Moody’s outlook for the banking industry in Asia is increasingly negative, but our outlook for bank ratings generally remains stable, reflecting our confidence that the region’s banks can still deliver performance consistent with their current ratings,” it said in a paper on Asian financial institutions.
Asian banks will not be spared from the economic turmoil affecting the rest of the world, but they will remain adequately capitalized and as a result will not likely suffer from rating downgrades, it added.
However, some Asian banks face some risks in the short term, such as the probability that property prices may have already peaked, it said.
“Bank exposure to the property sector is high in Asia, and most loan collateral is property,” said Jerry Chien, managing director of Moody’s financial institutions group for the Asia Pacific.
Also, banks that are dependent on the capital markets for financing will be badly affected by rising interest rates caused by the financial meltdown in the United States and the spillover to other parts of the globe, Moody’s said.
Asian banks will benefit from the fact that their counterparts in the United States and Europe will suffer from liquidity problems, if not bankruptcies, it said.
“On the positive side, there will be reduced competition from foreign lenders, bringing the banks some quality lending opportunities and the opportunity to increase spreads,” it added.
Meanwhile, the insurance sector in Asia has also benefited from the financial woes in the West, the report said.
“For insurers, this situation can translate into increased business opportunities,” it said. “But, at the same time, it may also mean greater risk as many of the new markets are still in their infancy.” Edited by INQUIRER.net
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