Asian Credit Climate: For Asia-Pacific Banks, COVID-19 Crisis Could Add US$300 Billion To Credit Costs

Posted by Joachim Bartels | May 13, 2020 | ! Homepage Slider, ! Recent Country News, Asia Pacific, Breaking News, Country Risk Information, Member News, Rating Services, Risk Management Solutions, Risk Solutions - Prediction, S&P, S&P Global Ratings, The BIIA Network | 0 |

Asia-Pacific banking’s nonperforming assets and consequent credit losses could rise by US$600 billion and US$300 billion, respectively, in 2020 because of COVID-19, the oil price shock, and market volatility.
Events will hit the banking systems of China, India, and Indonesia the hardest.
While many Asia-Pacific banks will exhibit resilience, negative rating momentum is inevitable.

The economic storm created by COVID-19 will test the ratings resilience of the region’s 20 banking sectors. S&P Global Ratings recently cut our GDP assumptions for the region. We estimate an additional US$300 billion spike in lenders’ credit costs and a US$600 billion increase in nonperforming assets (NPAs) in 2020. We therefore believe negative rating momentum is likely for some Asia-Pacific banks during 2020 (see chart 1).

Source: S&P Global

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