- Asia-Pacific banks are stabilizing, but downside risks lurk in some jurisdictions.
- The China property sector is under pressure, and growth forecasts are lower across Southeast Asia. These risks are problematic for banks.
- Emerging trends--including digitalization technologies and an increasingly strong investor focus on ESG risks--could have profound effects on Asia-Pacific banks.
A shaky Chinese property sector and lower growth forecasts in Southeast Asia loom as threats to a stabilizing prognosis for Asia-Pacific banks.
Our net rating outlook bias for Asia-Pacific financial institutions is clawing its way out of deeply negative territory toward neutral ground. As of Aug. 31, 2021, the net outlook bias had improved to about -1%: this is up from -6% as of May 31, 2021; and -18% as of Oct. 31, 2020, during the depths of COVID-19.
The stabilizing trend, however, belies the potential for downside risks to intensify and in turn affect ratings. The past quarter was tough for banks in some jurisdictions. Notably, the spillover effects from property sector risks in China are heightened as the malaise engulfing Evergrande plays out. And in Southeast Asia our economic growth outlook is weaker. Recent negative government intervention in some jurisdictions has added to negative sentiment, which has affected our view of banks. Regionwide, there is the potential for the recently improved outlook trend to wane. It could even reverse.
Meanwhile, Asia-Pacific banking sectors face seismic shifts: digitalization technologies are affecting the financial services industry, and investor sentiment strongly favors ESG-positive initiatives. These developments may yet have a more influential impact on our outlook for banking sector creditworthiness across the region.
Our Economic Outlook Is Weaker
Our full-year 2021 Asia-Pacific growth forecast was recently revised to 6.7%, from 7.1%. This reflects several factors, chief among them: slower consumer activity and a spate of regulatory actions in China, the repercussions across the region of lower growth in China, and the effects of the delta variant outbreak in Southeast Asia. The pace of activity is slowing as the delta variant of the coronavirus has hindered growth; shutdowns are crimping mobility and spending, reducing production and confidence. That said, the tolerance for outbreaks is growing as vaccination rates rise. The risks to our baseline forecast are on the downside, reflecting uncertainties around the path of the pandemic and the extent to which China reins in its private enterprises (see "Economic Outlook Asia-Pacific Q4 2021: Growth Slows On COVID-19 And Rising China Uncertainty," Sept. 27, 2021).
Southeast Asian Banking Systems Under Pressure
For many emerging markets across Asia-Pacific, such as Thailand, the Philippines, Malaysia, Vietnam, Indonesia, and India, the path to recovery of banking systems remains laborious. Obstacles include: the risk of fresh COVID outbreaks from increasing delta variant caseloads, slow vaccination pace, and debt-burdened individuals and small and midsize enterprises. Most recently, we revised our economic risk trend for Malaysia to negative, from stable. Malaysia now joins Indonesia, Thailand, and the Philippines, which were already on negative trend. Banks face further pressures in some jurisdictions from negative government intervention, which means they must bear the cost of extensions in forbearance measures. During the quarter, we made downward revisions to our industry risk assessments for both Malaysia and Thailand to reflect these strains (see the BICRA Actions section below).
Evergrande--The Aftermath Is Still To Play Out
We believe the Chinese banking sector can digest a default by China Evergrande Group, a large Chinese property developer, with no significant disruption. But we are very cautious of the potential knock-on effects that could yet play out. An Evergrande failure alone would not destabilize the banking system. However, if such an event were followed by the defaults of a few more highly leveraged major developers, it could evolve into a challenging situation.
The banking sector's direct exposure to Evergrande appears well distributed. The developer's lending--mostly project loans--is largely secured. Some banks are also indirectly exposed to Evergrande via the wealth management products that they originated. Banks could be on the hook to share the loss should these products fail.
The Chinese banking sector has a reasonable buffer to absorb any Evergrande fallout. Exposure to property developers across the industry was about 8% of total loans at the end of 2020. These loans were mostly made with a minimum 70% loan to value at origination(see "Credit FAQ: Evergrande Default Contagion Risk--Ripple Or Wave?," Sept. 20, 2021).
China Minsheng Banking Corp. Ltd. is one of Evergrande's main banks, but it has also been cutting its exposure to Evergrande in the past year. We have a positive outlook on Minsheng Bank because we expect its capitalization to improve. We will continue to monitor the appropriateness of keeping a positive outlook as more details of its exposure to Evergrande emerge.
China Huarong Downgraded Amid Weakening Asset Quality
On Sept. 9, 2021, we lowered the long-term issuer credit ratings on China Huarong and China Huarong International Holdings Ltd. to 'BBB' from 'BBB+'. The outlook on the ratings on China Huarong and its subsidiaries is negative. This reflects our view that the group's leverage is still under pressure, given uncertainties over its recapitalization and asset disposal plan, in addition to falling regulatory barriers to entry for the distressed asset management sector.
We expect the asset quality of China Huarong Asset Management Co. Ltd. to remain weak over the next two years, while its capital and leverage should recover with new capital from strategic investors and the disposal of noncore assets. The importance of China Huarong Financial Leasing Co. Ltd. to the group will reduce as the group refocuses on its core business. We also lowered the long-term issuer credit rating on Huarong Financial Leasing to 'BBB-' from 'BBB+' (see "Research Update: China Huarong And Subsidiaries Downgraded Amid Weakening Asset Quality; Outlook Negative," Sept. 9, 2021).
Not All Doom And Gloom For The Chinese Banking Sector
We view an anticipated slower trajectory for debt growth and property prices as a fundamentally positive development for the banking sector. Meanwhile, GDP levels and GDP per capita continue to expand at solid rates, adding to buffers against credit risks in the economy. These factors could eventually lead us to assess economic risk more favorably for the China banking sector, should the policy direction remain clear and be consistently executed (see "Outlook Revisions On Four China Banks Reflect Slower Debt And Property Price Growth," Aug. 9, 2021). We revised our economic risk trend on the Chinese banking sector to positive from stable reflecting a one-in-three chance our economic risk score within our Banking Industry and Country Risk Assessment (BICRA) for China will improve by one category over the next two years. A key factor, however, will be the extent to which the banking sector can contend with short-term stress affecting the property sector at current bank rating and outlook levels.
The recent revision of the economic risk trend caused us to revise the outlooks on three China-based banks to positive from stable, and the outlook to stable from negative for a fourth bank. We affirmed the issuer credit ratings on all four entities. We also affirmed the issuer credit rating on China Merchants Bank Co. Ltd., where the outlook remains on positive.
Digitalization Takes Center Stage
The digitalization ecosystem across financial markets and the financial services sector is developing rapidly and could eventually have a profound effect on banks. A recent initial report (see "Digitalization Of Markets: Framing The Emerging Ecosystem," Sept. 16, 2021) provides a high-level framework for understanding the evolving digital landscape and ecosystem, including catalysts and obstacles for its advancement and credit implications. It presents a compilation of short reports on various key aspects of the digitalization of markets, including the technology that powers digitalization, the global regulatory and policy landscape, the decentralized finance (DeFi) ecosystem, tokenization, altcoins, and nonfungible tokens (NFTs), to name a few.
Central Banks In Asia-Pacific: Cracking The CBDC Code
One aspect of digitalization in Asia-Pacific in the spotlight is central bank digital currencies (CBDCs). S&P Global Ratings expects most central banks, including those in Asia-Pacific, will start cautiously, should they decide to offer central bank-backed digital payment options. We don't believe monetary authorities will rush into digital pathways that drive banks off-road. However, developments in the region are accelerating.
Central banks will likely lean toward a model whereby banks and other financial intermediaries continue to play a strong intermediation role, rather than one managed by the central banks themselves. The future credit impact on Asia-Pacific banks seems to hinge upon the design and objective that central banks are chasing. Transition to reality for central banks is a work in progress. And they face tough choices as models evolve.
China is leading from the front. The country is already well-progressed in pilot trials for its retail CBDC in 2020 and is better-progressed compared with other jurisdictions in Asia-Pacific, and globally. For many banking systems in the region, CBDCs are still in an exploratory stage. Nonetheless, the pace of regulatory developments is evolving and should increase as central bankers collaborate and monitor actions of front-runners such as China (see "The Future Of Banking: Central Bank Digital Currencies In Asia-Pacific--Pathways Are Plenty, Destination Is Uncertain," Oct. 5, 2021).
ESG Risks--Increasingly Front of Mind
Investors have an increasingly strong interest in environmental, social, and governance (ESG) credit factors. S&P Global Ratings recently released its general criteria to articulate the principles that S&P Global Ratings applies to incorporate ESG credit factors into its credit ratings analysis. We do this through the application of our sector-specific criteria when we think the ESG factors are, or may be, relevant and material to our credit ratings. The methodology enhances the transparency of how ESG factors can influence creditworthiness. The criteria apply to our ratings on all issuers and issues (see "General Criteria: Environmental, Social, And Governance Principles In Credit Ratings," Oct. 10, 2021).
LIBOR Transition Likely To Be Manageable For Asia-Pacific Banks
A particular focus for us in coming months will be how banking jurisdictions and individual banks can effect their transition away from LIBOR. S&P Global Ratings believes Asia-Pacific banks are largely prepared for a smooth transition away from LIBOR, the London Interbank Offer rate. By the end of December 2021, the ICE Benchmark Administration (IBA) will stop publishing LIBOR panel rates for 30 settings across U.S. dollar, pound sterling, Japanese yen, euro, and Swiss franc currencies. Five U.S. dollar settings will continue until the end of June 2023.
To avoid disruption to legacy contracts that reference the one-, three-, and six-month sterling and Japanese yen LIBOR settings, the U.K.'s Financial Conduct Authority will require the IBA to publish these settings under a synthetic methodology, based on term risk-free rates, for an additional year. We view this as a positive development as it will help lower transitioning risk in Asia-Pacific.
Singapore is ahead of the pack when it comes to alternative refence rate transitioning, in our view. Other Asia-Pacific jurisdictions have made varied progress. We do not anticipate taking any rating actions on banks in this region due to the LIBOR transition (see "Asia-Pacific Banks Ready For Life After LIBOR," Oct. 7, 2021)
Global Banks Show Tantalizing Signs Of Stability
Post the onset of COVID-19, the global banking sector is gradually clawing its way back to normalcy. Authorities' strong support for households and corporates over the course of the pandemic has clearly helped banks. Lenders were also well positioned going into the outbreak, after banks bolstered their capital, provisioning, funding, and liquidity buffers in the wake of the global financial crisis (see "Global Banking Country Outlook Midyear 2021: Tantalizing Signs Of Stability" and "Global Banks Outlook Midyear 2021: Clawing Back To Normalcy," July 22, 2021.
Bank Capital Buffers Hold Steady
Further, across the Asia-Pacific and indeed global banking sector, we expect risk-adjusted capital (RAC) ratios to remain relatively stable. This mainly reflects a gradual recognition of credit losses globally, except in some regions such as North America and Brazil, where the bulk of credit losses has already been recognized, and Australia where banks are returning excess capital. Among European banks, RAC ratios may fall moderately this year, not at least as banks restart distributions to shareholders, but even then RAC ratios may well remain above the end of 2019 levels for many banks (see "100 Banks: Capital Ratios Show Resilience To The Pandemic," Sept. 28, 2021).
|Real GDP Forecast|
|Change from June 2021 forecast (percentage point)|
|(% year over year)||2020||2021||2022||2023||2024||2021||2022||2023|
|Note: For India, 2020 = FY 2020 / 21 end March 31, 2021; 2021 = FY 2021 / 22, 2022 = FY 2022 / 23, 2023 = FY 2023 / 24, 2024 = FY 2024 / 25. FY--Fiscal year. e--Estimate. Source: S&P Global Ratings.|
Banking Sector Research
- Asia-Pacific Banks Ready For Life After LIBOR, Oct. 7, 2021
- The Future Of Banking: Central Bank Digital Currencies In Asia-Pacific--Pathways Are Plenty, Destination Is Uncertain, Oct. 5, 2021
- The Resolution Story For Europe's Banks: More Resolvability, Consistency, Credibility, Oct. 5, 2021
- Digitalization Of Markets: How Digital Bonds Can Disrupt A $120 Trillion Market, Oct. 4, 2021
- Banking Industry Country Risk Assessment Update: September 2021, Sept. 30, 2021
- Top 100 Banks: Capital Ratios Show Resilience To The Pandemic, Sept. 28, 2021
- Japanese Regional Banks: The Pandemic Bonanza Is A Blip, Sept. 27, 2021
- Downside Risks Are Rising For Malaysian Banks; Ratings On Five Banks Affirmed With Negative Outlook, Sept. 23, 2021
- Bulletin: Mitsubishi UFJ Financial Group's Planned Sale Of U.S. Banking Unit Neutral For Credit Quality, Sept. 22, 2021
- Credit FAQ: Evergrande Default Contagion Risk--Ripple Or Wave?, Sept. 20, 2021
- Research Update: China Huarong And Subsidiaries Downgraded Amid Weakening Asset Quality; Outlook Negative, Sept. 9, 2021
- The Future Of Banking: Why Digital Lenders Are Willing To Lose Money In Hong Kong, Aug. 31, 2021
- Why Australia's Mutual Lenders Will Feel The Urge To Merge, Aug. 31, 2021
- Guangzhou Finance Holdings Outlook Revised To Stable; Ratings On Three Other Financial Institutions Also Affirmed, Aug. 31, 2021
- Bulletin: Bank Of China's Diversified Exposure Will Help It Navigate Rising Defaults, Aug. 30, 2021
- Bulletin: Low Funding Costs Support Liberty Earnings, Aug. 30, 2021
- Bulletin: China Policies, Retail Initiatives To Underpin ICBC's Profit Recovery, Aug. 30, 2021
- Research Update: Outlook On Two China Asset Management Companies Revised To Negative; China Huarong Remains On Watch Negative, Aug. 20, 2021
- Sector Review: Relief Measures Are Masking The COVID Hit For Thai Banks, Aug. 19, 2021
- Industry Report Card: Reserve Releases Should Continue To Push Large U.S. Banks' Profitability Higher, Aug. 17, 2021
- ESG: Does Blockchain And Distributed Ledger Technology Align With ESG Principles?, Sept. 16, 2021
- DeFi Lending: Set To Disrupt Traditional Systems--But Not Until Constraints Are Lifted, Sept. 16, 2021
- Digitalization Of Markets: Framing The Emerging Ecosystem, Sept. 16, 2021
- Bulletin: Bendigo and Adelaide Bank's Digital Investments Support Growth, Aug. 16, 2021
- Australia's AMP Bank Drives The Group As Demerger Progresses, Aug. 12, 2021
- Bulletin: United Overseas Bank Ltd.'s Senior Unsecured Notes Issue Rating Unaffected By Retap, Aug. 11, 2021
- Bulletin: Commonwealth Bank of Australia's Capital Position Remains Strong Despite A$6 Billion Share Buyback, Aug. 11, 2021
- Limited Anchor Upside For Chinese Securities Firms From Declining Economic Risk, Aug. 9, 2021
- Outlook Revisions On Four China Banks Reflect Slower Debt And Property Price Growth, Aug. 9, 2021
- Singapore Banks Push Into The Post-COVID Era, Aug. 5, 2021
- Bulletin: Merger Of Two Large Australian Mutual Lenders Will Solidify Their Credit Profile, Aug. 4, 2021
- Climate Risk Vulnerability: Europe's Regulators Turn Up The Heat On Financial Institutions, Aug. 2, 2021
- 2021 EU Bank Stress Test: More Demanding, Better Resilience, Aug. 2, 2021
- Global Banking Country Outlook Midyear 2021: Tantalizing Signs Of Stability, July 22, 2021
- Global Banks Outlook Midyear 2021: Clawing Back To Normalcy, July 22, 2021
- The European Commission's New Initiatives Will Complement Banks' Money Laundering Fight, July 21, 2021
- A Little More Clarity, A Little Less Gloom: An Update On Our Bank Credit Loss Forecasts, July 15, 2021
- Indonesia's COVID-19 Struggle, July 15, 2021
- Asia-Pacific Financial Institutions Monitor 3Q 2021: Inching Toward The Positive, July 14, 2021
- Industry Report Card: Japan Regional Banks Face Drawn-Out Profit Recovery, July 14, 2021
- Ratings Component Scores For The Top 200 Banks Globally--July 2021, July 13, 2021
- Credit FAQ: Can Islamic Banks Maintain Strong Growth In Southeast Asia?, July 5, 2021
- Research Update: ME Bank Upgraded To 'BBB+' On Completed Acquisition By BoQ, Off Watch Positive; BoQ Ratings Affirmed; Outlooks Positive, July 1, 2021
- Research Update: Westpac New Zealand Outlook Revised To Stable On Confirmed Ownership Retention; 'AA-/A-1+' Ratings Affirmed, July 1, 2021
- Economic Research: Stock-Flow Confusion Yet Again: QE and Tapering, Oct. 8, 2021
- Economic Outlook Q4 2021: Global Growth Is Steady As Delta Spurs Wide Regional Swings, Sept. 29, 2021
- Economic Outlook Emerging Markets Q4 2021: Vaccination Progress And Policy Decisions Remain Key To Growth, Sept. 28, 2021
- Economic Outlook Asia-Pacific Q4 2021: Growth Slows On COVID-19 And Rising China Uncertainty, Sept. 27, 2021
- Pandemic Is Disrupting 2021 Growth Outlooks In Southeast Asia, Aug. 19, 2021
- Indonesia's COVID-19 Struggle, July 15, 2021
Sovereign, Credit Markets And Other Research
- Credit Trends: 'BBB' Pulse: M&A Rebound Could Put The Corporate Credit Recovery On The Back Burner, Oct. 11, 2021
- Default, Transition, and Recovery: Global Corporate Default Tally For 2021 Reaches 62, Oct. 8, 2021
- Default, Transition, and Recovery: Yet Another Week With No Corporate Defaults, Oct. 1, 2021
- Default, Transition, and Recovery: The Global Weakest Links Tally Reaches Pre-Pandemic Levels, Sept. 29, 2021
- Global Credit Conditions Q4 2021: Supply Chain Strain, Inflation Pain, Sept. 29, 2021
- Credit Conditions: Sector Roundup Asia-Pacific Q4 2021: Improved Rating Trend Likely To Wane, Sept. 28, 2021
- Credit Conditions: Credit Conditions Asia-Pacific Q4 2021: COVID Besets, China Resets, Sept. 28, 2021
- Default, Transition, and Recovery: Third Quarter Corporate Default Tally At Lowest Level Since 2014, Sept. 17, 2021
- Default, Transition, and Recovery: 2020 Annual Global Financial Services Default And Rating Transition Study, Sept. 14, 2021
- Default, Transition, and Recovery: The 2021 Global Corporate Default Tally Remains At 59, Sept. 10, 2021
- Default, Transition, and Recovery: 2021 Emerging Markets Corporate Defaults Reach 13, Aug. 27, 2021
- S&P Global Ratings Publishes 2020 Annual Greater China Corporate Default And Rating Transition Study, Aug. 25, 2021
- Credit Trends: 'BBB' Pulse: Two Fallen Angels Were Downgraded In July Amid A Lull In Rising Stars, Aug. 25, 2021
- Default, Transition, and Recovery: 2020 Annual Greater China Corporate Default And Rating Transition Study, Aug. 24, 2021
- Will COVID-19 Waves Wash Away Sovereign Credit Support In Asia-Pacific?, Aug. 23, 2021
- Default, Transition, and Recovery: Emerging Market Defaults Inch Up But Remain Well Below Their 2020 Tally, Aug. 6, 2021
- Default, Transition, and Recovery: Global Weakest Links Fall Despite A Rising Speculative-Grade Population, Aug. 3, 2021
- Credit Trends: Downgrade Potential Declined By Over One-Third In The Second Quarter, Aug. 3, 2021
- Default, Transition, and Recovery: The 2021 Global Corporate Default Tally Remains At 53, July 30, 2021
- Credit Trends: Global Refinancing--Rated Corporate Debt Due Through 2026 Holds Near $12 Trillion, July 27, 2021
- Credit Trends: Global Financing Conditions: Bond Issuance Remains Strong Despite An Expected Modest Contraction, July 26, 2021
Ratings Methodology News
Recent BICRA Changes And Full Reports
Over the past quarter (through Sept. 30, 2021), we have made the following changes to our Banking Industry Country Risk Assessments (BICRAs) in the Asia-Pacific region.
We have revised our economic risk trend for Malaysia to negative from stable. In our view, downside systemic risks for Malaysian banks are on the rise. Banks are also facing rising risk in the competitive environment due to negative government intervention. We now see a one-in-three possibility that Malaysian banks could underperform our base-case asset quality expectations in the next 12-24 months.
We have also revised our industry risk score for Malaysia to '4' from '3'. We see an increased risk of negative government intervention in the Malaysian banking industry. The risk is reflected in the repeated government intervention in relief measures given out by domestic banks such as the recent announcement to waive off fourth-quarter interest for B50 (bottom 50% of individual borrowers by income) customers. Such interventions could recur, given the ongoing political instability, and impede the banking sector's ability to operate commercially.
We have revised our industry risk trend for Sri Lanka to negative from stable. This reflects the risk that the deteriorating sovereign situation could weaken the banking system's funding profile. In our base case, domestic deposit holders' trust and confidence in the banking system will remain intact. Deposit growth remained strong in the first six months of 2021, at an annualized rate of 16%. However, we may revise downward our assessment of the funding profile if we believe the stability of domestic deposits is affected. In our view, the downside risk to the banking industry will reduce only after the sovereign situation stabilizes.
We have revised our industry risk score for Thailand to '5' from '4'. Thailand's lenient regulatory norms, including the relaxation of loan classification, will likely raise systemic risk for its banks. Such regulatory norms will prolong the recognition of underlying problem loans for the Thai banking system. The lax relief measures and the recent extension of relaxed loan classification norms to end 2023 could further distort the Thai banking industry's impaired loan ratio.
We have revised our economic risk trend for China to positive from stable. We see a one-in-three chance our economic risk score within our BICRA for China will improve by one category over the next two years. Policies to slow debt growth and control property prices appear to be working. GDP levels and GDP per capita continue to expand at solid rates, adding to buffers against credit risks in the economy. These factors could lead us to assess economic risk more favorably for the China banking sector, should the policy direction remain clear and be consistently executed.
We have published the following comprehensive BICRA reports in the past quarter in Asia-Pacific.
- Banking Industry Country Risk Assessment: Malaysia, Oct. 5, 2021
- Banking Industry Country Risk Assessment: Thailand, Sept. 20, 2021
- Banking Industry Country Risk Assessment: Korea, Sept. 9, 2021
- Banking Industry Country Risk Assessment: Cambodia, Sept. 3, 2021
- Banking Industry Country Risk Assessment: Mongolia, Aug. 30, 2021
- Banking Industry Country Risk Assessment: Sri Lanka, Aug. 27, 2021
- Banking Industry Country Risk Assessment: China, Aug. 9, 2021
- Banking Industry Country Risk Assessment: Japan, Aug. 5, 2021
- Banking Industry Country Risk Assessment: Hong Kong, July 7, 2021
- Banking Industry Country Risk Assessment: Philippines, July 1, 2021
Webcasts: Asia-Pacific Banking Insights
In the past quarter, we have held the following webcasts to share our views on Asia-Pacific and other banking topics. The replays are available on:
- Global Credit Conditions--Shifting Horizons Beyond COVID (APAC), Sept. 30, 2021
- Rising Downside Risks For Malaysian Banks, Sept. 29, 2021
- Evergrande Default Contagion Risk: What It Means For China Sovereign And Banks, Sept. 21, 2021
- Spotlight on China: Evergrande, Huarong and China's Recent Policy Measures, Sept. 20, 2021
- India Credit Spotlight 2021, Sept. 8, 2021
- How China's Changing State Support Drove Our Rating Actions On Corporates And Financial Institutions, Sept. 2, 2021
- Competitive Pressures Fuel Australian Mutual Lender Consolidation, Sept. 1, 2021
- Hong Kong's COVID-19 Recovery: Economy, Government, Financial Institutions, And Insurance Sectors Outlook, Aug. 18, 2021
- Korea's COVID-19 Recovery Economy, Sovereign And Financial Institutions Outlook, Aug. 4, 2021
- Global Banking Outlook Midyear 2021--Tantalizing Signs Of Stability (APAC Session), July 28, 2021
- Spotlight on Emerging Markets: Indonesia's COVID-19 Struggle, July 16, 2021
- Credit Losses Set To Decline For Most Asia-Pacific Banks, June 30, 2021
The table below presents S&P Global Ratings' views about key risks and risk trends for banking sectors in Asia-Pacific countries where we rate banks. For more detailed information, please refer to the latest BICRA on a given country. According to our methodology, BICRAs fall into groups from '1' to '10', ranging from what we view as the lowest-risk banking systems (group '1') to the highest-risk (group '10').
|Issuer Credit Ratings And Component Scores For The Top 60 Asia-Pacific Banks|
|Institution||Opco L-T ICR/outlook||Anchor||Business position||Capital and earnings||Risk position||Funding and liquidity||SACP or Group SACP||Type of support||No. of notches of support||Additional factor adjustment|
|Australia and New Zealand Banking Group Ltd.||AA-/Stable||bbb+||Strong||Strong||Adequate||Avg/Adequate||a||Sys. Imp.||2||0|
|Commonwealth Bank of Australia||AA-/Stable||bbb+||Strong||Strong||Adequate||Avg/Adequate||a||Sys. Imp.||2||0|
|Macquarie Bank Ltd.||A+/Stable||bbb+||Adequate||Strong||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|National Australia Bank Ltd.||AA-/Stable||bbb+||Strong||Strong||Adequate||Avg/Adequate||a||Sys. Imp.||2||0|
|Westpac Banking Corp.||AA-/Stable||bbb+||Strong||Strong||Adequate||Avg/Adequate||a||Sys. Imp.||2||0|
|Agricultural Bank of China Ltd.||A/Stable||bb+||Very Strong||Adequate||Adequate||Above Avg/Strong||bbb+||GRE||2||0|
|Bank of China Ltd.||A/Stable||bbb-||Very Strong||Adequate||Adequate||Above Avg/Strong||a-||GRE||1||0|
|Bank of Communications Co. Ltd.||A-/Positive||bb+||Strong||Adequate||Adequate||Above Avg/Adequate||bbb-||GRE||3||0|
|China CITIC Bank Co. Ltd.||BBB+/Positive||bb+||Adequate||Weak||Adequate||Avg/Adequate||bb||Group||4||0|
|China Construction Bank Corp.||A/Stable||bb+||Very Strong||Adequate||Adequate||Above Avg/Strong||bbb+||GRE||2||0|
|China Merchants Bank Co. Ltd.||BBB+/Positive||bb+||Strong||Moderate||Strong||Above Avg/Adequate||bbb||Sys. Imp.||1||0|
|China Minsheng Banking Corp. Ltd.||BBB-/Positive||bb+||Adequate||Weak||Adequate||Avg/Adequate||bb||Sys. Imp.||2||0|
|Hua Xia Bank Co. Ltd.||BBB-/Stable||bb+||Adequate||Moderate||Moderate||Avg/Adequate||bb||GRE||2||0|
|Industrial and Commercial Bank of China Ltd.||A/Stable||bb+||Very Strong||Adequate||Adequate||Above Avg/Strong||bbb+||GRE||2||0|
|Postal Savings Bank Of China Co. Ltd.||A/Stable||bb+||Strong||Moderate||Adequate||Above Avg/Strong||bbb||GRE||3||0|
|Shanghai Pudong Development Bank Co. Ltd.||BBB/Stable||bb+||Adequate||Weak||Adequate||Avg/Adequate||bb||GRE||3||0|
|Bank of China (Hong Kong) Ltd.||A+/Stable||bbb+||Strong||Strong||Adequate||Above Avg/Strong||a+||Sys. Imp.||1||-1|
|Standard Chartered Bank (Hong Kong) Ltd.||A+/Stable||bbb+||Adequate||Strong||Adequate||Above Avg/Strong||a||Sys. Imp.||1||0|
|The Bank of East Asia Ltd.||A-/Stable||bbb+||Adequate||Adequate||Adequate||Avg/Adequate||bbb+||Sys. Imp.||1||0|
|The Hongkong and Shanghai Banking Corp. Ltd.||AA-/Stable||bbb+||Strong||Strong||Adequate||Above Avg/Strong||a+||Sys. Imp.||1||0|
|Axis Bank Ltd.||BB+/Stable||bb+||Strong||Adequate||Moderate||Avg/Adequate||bb+||None||0||0|
|Bank of India||BB+/Stable||bb+||Adequate||Moderate||Weak||Above Avg/Strong||bb||GRE||1||0|
|HDFC Bank Ltd.||BBB-/Stable||bb+||Strong||Adequate||Strong||Above Avg/Strong||bbb+||None||0||-2|
|ICICI Bank Ltd. §||BBB-/Stable||bb+||Strong||Strong||Moderate||Avg/Adequate||bbb-||None||0||0|
|State Bank of India||BBB-/Stable||bb+||Strong||Moderate||Moderate||Above Avg/Strong||bbb-||None||0||0|
|PT Bank Mandiri (Persero)||BBB-/Negative||bb+||Strong||Strong||Moderate||Avg/Strong||bbb-||None||0||0|
|PT Bank Rakyat Indonesia (Persero) Tbk.||BBB-/Negative||bb+||Strong||Strong||Moderate||Avg/Strong||bbb-||None||0||0|
|Chiba Bank Ltd.||A-/Stable||bbb+||Adequate||Adequate||Strong||Avg/Strong||a-||None||0||0|
|Mitsubishi UFJ Financial Group Inc.*||A/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||None||0||0|
|Mizuho Financial Group Inc.*||A/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||None||0||0|
|Nomura Holdings Inc.*||A-/Stable||bbb+||Moderate||Strong||Moderate||Avg/Adequate||bbb||Sys. Imp.||2||0|
|Norinchukin Bank||A/Negative||bbb+||Adequate||Adequate||Moderate||Above Avg/Strong||bbb+||Sys. Imp.||2||0|
|Resona Holdings*||A/Stable||bbb+||Adequate||Adequate||Adequate||Above Avg/Strong||a-||Sys. Imp.||1||0|
|Shinkin Central Bank||A/Stable||bbb+||Adequate||Adequate||Adequate||Avg/Strong||bbb+||Sys. Imp.||2||0|
|Shizuoka Bank Ltd.||A-/Stable||bbb+||Adequate||Strong||Adequate||Avg/Strong||a-||None||0||0|
|Sumitomo Mitsui Financial Group Inc.*||A/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||None||0||0|
|Sumitomo Mitsui Trust Holdings*||A/Stable||bbb+||Strong||Adequate||Adequate||Avg/Strong||a-||Sys. Imp.||1||0|
|Industrial Bank of Korea||AA-/Stable||bbb+||Adequate||Adequate||Adequate||Avg/Adequate||bbb+||GRE||4||0|
|KEB Hana Bank||A+/Stable||bbb+||Strong||Adequate||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|Kookmin Bank||A+/Stable||bbb+||Strong||Adequate||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|Korea Development Bank§||AA/Stable||bbb+||Moderate||Moderate||Weak||Below Avg/Adequate||bb-||GRE||10||0|
|Nonghyup Bank||A+/Stable||bbb+||Strong||Adequate||Moderate||Above Avg/Adequate||bbb+||GRE||3||0|
|Shinhan Bank||A+/Stable||bbb+||Strong||Adequate||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|Woori Bank||A+/Stable||bbb+||Strong||Adequate||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|Public Bank Bhd.||A-/Negative||bbb||Strong||Adequate||Strong||Above Avg/Strong||a||None||0||-1|
|Malayan Banking Bhd.||A-/Negative||bbb||Strong||Adequate||Adequate||Above Avg/Strong||a-||None||0||0|
|CIMB Bank Bhd.||A-/Negative||bbb||Strong||Adequate||Adequate||Above Avg/Strong||a-||None||0||0|
|ANZ Bank New Zealand Ltd.||AA-/Stable||bbb||Strong||Strong||Adequate||Avg/Adequate||a-||Group||3||0|
|ASB Bank Ltd.||AA-/Stable||bbb||Strong||Strong||Adequate||Avg/Adequate||a-||Group||3||0|
|Bank of New Zealand||AA-/Stable||bbb||Strong||Strong||Adequate||Avg/Adequate||a-||Group||3||0|
|Westpac New Zealand Ltd.||AA-/Stable||bbb||Strong||Strong||Adequate||Avg/Adequate||a-||Group||3||0|
|DBS Bank Ltd.||AA-/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||Sys. Imp.||2||0|
|Oversea-Chinese Banking Corp. Ltd.||AA-/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||Sys. Imp.||2||0|
|United Overseas Bank Ltd.||AA-/Stable||bbb+||Strong||Adequate||Adequate||Above Avg/Strong||a||Sys. Imp.||2||0|
|CTBC Bank Co. Ltd.||A/Stable||bbb||Strong||Strong||Adequate||Avg/Strong||a-||Sys. Imp.||1||0|
|Mega International Commercial Bank Co. Ltd.||A+/Stable||bbb||Strong||Strong||Adequate||Avg/Adequate||a-||Sys. Imp.||2||0|
|Bangkok Bank Public Co. Ltd.||BBB+/Stable||bb+||Strong||Adequate||Adequate||Above Avg/Strong||bbb||Sys. Imp.||1||0|
|KASIKORNBANK PCL||BBB+/WatchNeg||bb+||Strong||Adequate||Adequate||Avg/Strong||bbb-||Sys. Imp.||2||0|
|Krung Thai Bank Public Co. Ltd.||BBB/WatchNeg||bb+||Adequate||Adequate||Adequate||Avg/Adequate||bb+||Sys. Imp.||2||0|
|Siam Commercial Bank Public Co. Ltd.||BBB+/Negative||bb+||Strong||Adequate||Adequate||Avg/Strong||bbb-||Sys. Imp.||2||0|
|Data as of Sept. 30, 2021. "Type of Support" column -"None" includes some banks where ratings uplift because of support factors may be possible but none is currently included. (For example, this column includes some systemically important banks where systemic importance results in no rating uplift). *Holding company; the rating reflects that on the main operating company. ICR--Issuer credit rating. GRE--Government-related entity. SACP--Stand-alone credit profile. Sys. Imp.--Systemically important. ALAC--Additional loss-absorbing capacity. N/A--Not applicable. Sov --Capped by Sovereign Rating. §This ICR applies to the Foreign Currency Rating only.|
|Recent Rating Actions: Asia-Pacific Banks|
|Release Date||Org Legal Name||Org Country||From||To|
|30/08/2021||Guangzhou Finance Holdings Group Co. Ltd.||China||BBB+/Negative/A-2||BBB+/Stable/A-2|
|9/08/2021||China CITIC Bank Corporation Limited||China||BBB+/Stable/A-2||BBB+/Positive/A-2|
|9/08/2021||China Guangfa Bank Co. Ltd.||China||BBB-/Negative/A-3||BBB-/Stable/A-3|
|9/08/2021||Bank of Communications Co. Ltd.||China||A-/Stable/A-2||A-/Positive/A-2|
|9/08/2021||China Minsheng Banking Corp., Ltd.||China||BBB-/Stable/A-3||BBB-/Positive/A-3|
|9/08/2021||Bank of Communications (Hong Kong) Limited||Hong Kong||A-/Stable/A-2||A-/Positive/A-2|
|1/07/2021||Westpac New Zealand Ltd.||New Zealand||AA-/Negative/A-1+||AA-/Stable/A-1+|
|1/07/2021||Members Equity Bank Ltd.||Australia||BBB/WatchPos/A-2||BBB+/Positive/A-2|
|*Recent rating actions are for the period July 1, 2021 to Sept. 30, 2021. The list refers to banks and bank holding companies (banks) where the rating has been upgraded or downgraded, or the outlook has been changed. Banks where the ratings have been affirmed or the outlooks have not been changed are not included in the list. ICICI Bank rating listed above is a foreign currency rating.|
Editing: Lex Hall
Design: Evy Cheung
This report does not constitute a rating action.
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|Primary Credit Analyst:||Gavin J Gunning, Melbourne + 61 3 9631 2092;|
|Secondary Contacts:||Vera Chaplin, Melbourne + 61 3 9631 2058;|
|Ryoji Yoshizawa, Tokyo + 81 3 4550 8453;|
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|Research Assistant:||Priyal Shah, CFA, Mumbai|
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