Outlook For ASEAN Banking Systems Stable, Says S&P

KUALA LUMPUR, May 11 (Bernama) -- Banks in ASEAN have sufficient buffer to remain resilient to external macroeconomic headwinds in 2016, making the outlook for the region's banking sector very stable, says Standard & Poor's Ratings Services (S&P). The view was expressed by the credit rating agency in a report titled, "ASEAN Banks Can Withstand Asset-Quality Pain In 2016," which was released in Singapore Wednesday. S&P Global Ratings Credit Analyst Ivan Tan said the fair-to-satisfactory profitability and generally sound capitalisation of ASEAN banks should mitigate an erosion in asset quality in 2016. "Many of these banks are systemically important and benefit from a high likelihood of government support," said Tan in a statement Wednesday. S&P expects non-performing loans of ASEAN banks to continue rising this year. "However, our base case assumes a gradual deterioration, rather than a sharp spike in delinquencies," he added. The credit rating agency also expects loans growth to reduce in most ASEAN economies due to a slowdown in regional economies. "Loans growth in Malaysia could moderate to between six and eight per cent in 2016, from a five-year average of 10 per cent, amid unfolding external uncertainties about the pace of US Federal Reserve rate normalisation and the economic rebalancing in China," added Tan. -- BERNAMA