Top bankers in Asia-Pacific are cautiously optimistic about the industry's growth prospects, though they are mindful of uneven economic recovery and the emergence of new variants of COVID-19.
During second-quarter 2021 conference calls, bank executives talked about how their businesses are dealing with pandemic-related uncertainties, as well as the growing demand for environmental, social and governance products and solutions.
|Commonwealth Bank of Australia CEO Matthew Comyn
Source: Commonwealth Bank of Australia
Despite uncertainties, Asia-Pacific bank leaders remained optimistic about key economic indicators and growth prospects.
"We see a number of factors supporting growth, including the significant accumulated household savings, a swift employment recovery due to low supply of labor, expansion in fiscal and monetary support and the strong housing market that has been a key area of support for the economy," said Matthew Comyn, CEO of Commonwealth Bank of Australia.
Australia is facing near-term challenges as a result of lockdowns due to COVID-19 cases, but the economy will rebound in late 2021 and grow strongly in 2022, Comyn said, adding that the New Zealand economy is "in a very strong position".
In Singapore, the chief of Southeast Asia's biggest bank by assets said government support to counter the pandemic is relatively uncertain, a factor the lender is considering for 2022.
|DBS CEO Piyush Gupta
Source: DBS Group Holdings
"When I'm doing my budgeting for [bad loan provisions] next year, I'm not planning to budget at this year's low levels ... And the reason for that is that, at the margin, the net impact of the government fiscal and monetary stimulus responses finishing in many of the countries is still relatively unknown," said Piyush Gupta, CEO of DBS Group Holdings Ltd.
State Bank of India, India's biggest lender by assets, said its asset quality fared well in the financial year ended March 2021, though uncertainties remain as many experts believe a fresh wave of infections may hit the South Asian nation.
"Given the dynamic situation and the likelihood of a third wave, coupled with the interplay of economic linkages between enterprise and industrials, leading to reprioritization of obligation in time of adversity, we would like to refrain from giving any forward-looking guidance at this point of time," said Dinesh Kumar Khara, chairman of State Bank of India.
"While the challenges due to COVID-19 and its resultant impact are still very real, we believe the bank can weather the disruptions and come out stronger over the medium term," Khara said.
|State Bank of India chairman Dinesh Kumar Khara
Source: State Bank of India
Kotak Mahindra Bank Ltd. CEO Uday Suresh Kotak was optimistic that given the high proportion of Indians with antibodies, either through vaccination or prior exposure to COVID-19, a fresh wave may be less destructive than the surge in May that crushed the nation's health infrastructure.
"It is on this expectation that we are looking at planning our way forward," Kotak said.
Japan's Nomura Holdings Inc. predicted unstable movements in the market and plans to stay prudent with risk. However, the Japanese brokerage is optimistic about the future.
"The current situation will not continue forever," Nomura CFO Takumi Kitamura said. "Especially, the monetary easing created lots of money that has been left to be invested somewhere. So sometime in the future, we will start to see the move with such funds waiting to be invested."
Opportunities in ESG
Opportunities in the ESG space remained on top of banks' agendas as governments and companies sharpen their focus on climate change.
"With many countries committing to green economic recoveries and nations and businesses committing to net-zero emissions, we anticipate that this demand will continue to expand," said Peter Hastings Warne, the chairman of Australia's Macquarie Group Ltd., which has committed to reaching net-zero operational emissions by 2025.
As of March, Macquarie had 44 GW of green energy assets in development, operation or management. For every dollar invested in conventional energy, the group is investing 6.64 dollars in renewable energy, Warne said.
Similarly, Singapore's Oversea-Chinese Banking Corp. Ltd. sees growing customer demand for environment-friendly products.
"We see a lot of investors who are putting into investment criteria that they have to buy green. So that's also one reason why our sustainable finance is actually growing so rapidly," said Helen Wong, OCBC group CEO. "I do see a lot of opportunities in both the equity and the debt capital markets."
Zia Ullah Khan and Ranina Sanglap contributed to this article.