The COVID-19 crisis continues to weigh on the credit quality of Asia-Pacific financial institutions. Our ratings outlook bias for financial institutions in the region is tilted firmly toward the negative. This primarily reflects the significant recent credit impacts of the COVID-19 pandemic, oil price shock, and market volatility. Currently, negative outlooks (about 17% of ratings) significantly outnumber positive outlooks (about 3% of ratings). Remaining ratings on positive outlook represent a diminishing pool of credits influenced by idiosyncratic factors rather than systemic trends.
Principally influencing our outlook for Asia-Pacific financial institution credit are our macroeconomic forecasts, which have materially worsened in recent months. Our growth forecast for Asia-Pacific in 2020 is now a meagre 0.3%--barely in the black and well down on our initial forecast for 2020 leading into the calendar year of 4.7%. That said, 2020 growth expectations for Asia-Pacific compare favorably with the eurozone (-7.3%) and the U.S. (-5.2%). Latest 2020 growth estimates in Asia-Pacific include: China (1.2%), India (1.8%), and Japan (-3.6%) (see table 1). In Asia-Pacific, our recovery expectations are for a flattish U-shape with activity returning to pre-outbreak levels, if at all, in 2023. If unemployment surges, we may be facing an elongated L-shape (see "Up Next: The Complicated Transition From COVID-19 Lockdown," April 16, 2020).
Credit Costs To Soar
As risks associated with COVID-19, the oil price shock, and significant market volatility take hold, we estimate that Asia-Pacific in 2020 will be hit with US$1.4 trillion in additional nonperforming assets (NPAs), and additional credit costs of about US$440 billion (see table 6 in "Credit Conditions Asia-Pacific: COVID-19: Flatter Growth, Tougher Recovery," published April 22, 2020). From an asset quality perspective, we expect banking systems in China, India, and Indonesia to be the hardest hit noting that other banking systems will also experience credit deterioration, to varying degrees.
Sharp Increase In Negative Outlooks
In the past months, as the impact of the COVID-19 outbreak continues to worsen, we have taken various negative rating actions. Most so far reflect negative changes impacting rating outlooks, not ratings themselves. As the year progresses, we cannot rule out more downgrades, however, if the COVID-19 pathway worsens or becomes more prolonged. Rating actions to date mainly reflect heightening rating pressures impacting sovereigns, economic weakness impacting banking systems, and entity-specific credit issues--in particular impacting banks with pre-existing financial strength issues (see "How COVID-19 Is Affecting Bank Ratings: May 2020 Update," published on May 7, 2020). Outlook revisions in Asia-Pacific accounted for about 42 of the 45 bank ratings actions that we taken since January this year. We currently have about 80% of Asia-Pacific financial institutions on stable; noting risks remain firmly on the downside.
Economic Headwinds Predominate
We have recently revised our economic risk trend on Banking Industry Country Risk Assessments (BICRAs) for Australia, Indonesia, India, Sri Lanka, and Papua New Guinea to negative from stable (see the BICRA Changes section below). Nonetheless, unprecedented support and flexibility measures from public and regulatory authorities toward banks, corporates, and households, and an expectation of extraordinary government support in a majority of banking systems, has tempered some of the effects.
Our expectations concerning economic trends are not uniformly negative. In China, economic trends as they affect banking-sector risks remain stable, noting that the starting point for Chinese bank ratings is on the low side, by global standards. Our view already takes into account high debt leverage and other prevalent risks identified prior to the onset of COVID-19. While the pandemic will undoubtedly take its toll on Chinese bank asset quality, we consider there is some scope for diminution in asset quality metrics for some Chinese banks with no immediate negative ratings impact. Further, in Hong Kong SAR, our economic trend outlook is also stable, noting that Hong Kong bank asset quality leading into the COVID-19 downturn compared favorably, by regional and global standards, and that the current downturn is cooling house prices, which is ameliorating--to some extent--one of our prior concerns.
Bank Reporting Season So Far
Numerous Asia-Pacific banks have begun reporting with our focus so far on our outlook for asset quality. Besides the topline impacts due mainly to lower interest rates, we are assessing the impact of debt moratoriums for congruence with our current outlook for bank credit, including on banks' NPAs and loan loss provisioning. While the pandemic remains a common denominator across the region, distinct variables affect each banking system's overall equation.
A case in point is Axis Bank Ltd., which recently identified that more than 10% of its customers (25% of its loan book by value) as of April 25, 2020, availed a payment moratorium. The bank's additional bad-loan provisioning of Indian rupee (INR) 77 billion, including INR30 billion related to the COVID-19 pandemic, triggered its INR14 billion after-tax loss for the quarter ended March 31, 2020. The significant number of the bank's borrowers opting for the moratorium could be partly due to some of the stronger borrowers also opting to conserve liquidity in these tough times. We will compare the proportion of banks' customers availing the moratorium across the region to see if Axis Bank--or other banks across the region--are outliers compared to peers (see "Bulletin: Axis Bank’s Q4 Loss Reflects Rise In Systemic Risks," published May 5, 2020). (See also the research list in this report for our latest views on individual banks).
China's Banking Sector Has Sufficient Buffers
We have maintained our stable trend for economic risks impacting the Chinese banking sector--noting that these risks are already high, in a global context. This is because we believe the country's banking sector, on average, has buffers to absorb worsening asset quality due to the COVID-19 pandemic. While some banks might report losses this year, longer-term banking industry and economic trends remain stable. We anticipate average provision coverage for China's reported nonperforming loans (NPLs) (including for policy banks) should drop slightly to about 190% in 2020 from roughly 200%. In our view, reported NPLs will only moderately rise, despite widespread loan forbearance--meaning the grace periods and other breaks that banks have offered to borrowers whose cash flows have been disrupted by the pandemic. We expect most of these forborne obligations to be classified as special-mention loans or earmarked as normal loans, rather than NPLs. S&P Global Ratings' own, broader metric for assessing bank asset quality includes the impact of loan forbearance and shows a sharper deterioration. We project our NPA ratio will almost double to 10% from pre-outbreak levels (see "Banking Industry Country Risk Assessment: China To Remain In Group '6'," published May 5, 2020).
Weakening Economic Conditions Weigh On Indian NBFCs
We expect the overall impact on the Indian nonbanking financial company (NBFC) sector to be more pronounced than on the banking sector, given some of them lend to weaker customers. Also, as the proportion of borrowers opting in for the moratorium increases, cash inflows for finance companies might get strained, making them dependent on their liquid assets and refinancing to service their upcoming debt maturities. Currently, NBFCs that we rate have sufficient liquidity, comprising liquid assets, undrawn lines from banks, and in some cases funding lines from group companies. That said, credit risk remains very high and continues to pose risks. The deterioration in NBFCs' asset quality may intensify as the economy slows amid the outbreak. India's finance companies are among the country's largest borrowers. A substantial part of this funding comes from banks. The failure of any large NBFC or housing finance company may deliver a solvency shock to lenders (see "Indian Financial Sector Braces For Fat Contagion Tail Risk," published Oct. 23, 2019).
S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak about midyear, and we are using this assumption in assessing the economic and credit implications. We believe the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
Table 1
| Real GDP Forecast | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Forecasts | Change from December 2019 forecast (ppt) | |||||||||||||||
| (% year over year) | 2019 | 2020 | 2021 | 2022 | 2023 | 2020 | 2021 | |||||||||
| Australia | 1.8 | (4.0) | 5.7 | 3.1 | 2.6 | (6.2) | 3.4 | |||||||||
| China | 6.1 | 1.2 | 7.4 | 4.7 | 5.3 | (4.5) | 1.8 | |||||||||
| Hong Kong | (1.2) | (3.9) | 4.8 | 2.6 | 2.4 | (4.1) | 2.7 | |||||||||
| India | 5.0 | 1.8 | 7.5 | 6.5 | 6.8 | (4.7) | 0.5 | |||||||||
| Indonesia | 5.0 | 1.8 | 6.3 | 5.6 | 5.2 | (3.3) | 1.2 | |||||||||
| Japan | 0.8 | (3.6) | 3.0 | 0.9 | 0.8 | (3.7) | 2.2 | |||||||||
| Malaysia | 4.3 | (1.1) | 7.6 | 5.1 | 4.7 | (5.6) | 3.0 | |||||||||
| New Zealand | 2.2 | (5.0) | 6.0 | 3.4 | 3.0 | (7.4) | 3.5 | |||||||||
| Philippines | 5.9 | (0.2) | 9.0 | 6.7 | 7.0 | (6.4) | 3.9 | |||||||||
| Singapore | 0.7 | (3.8) | 6.2 | 2.5 | 2.5 | (5.2) | 2.6 | |||||||||
| South Korea | 2.0 | (1.5) | 5.0 | 3.9 | 2.5 | (3.6) | 2.7 | |||||||||
| Taiwan | 2.7 | (1.2) | 4.0 | 2.6 | 2.4 | (3.6) | 1.8 | |||||||||
| Thailand | 2.4 | (4.2) | 6.2 | 4.2 | 3.7 | (7.0) | 3.0 | |||||||||
| Vietnam | 7.0 | 1.2 | 9.5 | 7.1 | 6.8 | (5.5) | 2.9 | |||||||||
| Asia-Pacific | 4.7 | 0.3 | 6.7 | 4.6 | 4.8 | (4.5) | 1.8 | |||||||||
| Note: For India, the year runs April to March, e.g. 2019--fiscal 2019 /2020, ending March 31, 2020. ppt--percentage point. | ||||||||||||||||
Key Banking Sector Risks
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 Banking Industry Country Risks Assessment (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').
Selected Research
Banking Sector Research
- Papua New Guinea Banks Face Rising Economic Risks, May 11, 2020
- Bulletin: Macquarie's Solid Results Fend Off COVID-19 Uncertainties, May 8, 2020
- Hong Kong Banks To See Manageable Increase In Credit Losses In 2020, May 8, 2020
- How COVID-19 Is Affecting Bank Ratings: May 2020 Update, May 7, 2020
- Philippine Banks Bolster Buffers For Turbulence Ahead, May 6, 2020
- Research Update: Kiwibank Ltd. Outlook Revised To Stable From Positive; 'A/A-1' Ratings Affirmed, May 6, 2020
- Banking Industry Country Risk Assessment: China To Remain In Group '6', May 5, 2020
- Bulletin: Axis Bank’s Q4 Loss Reflects Rise In Systemic Risks, May 5, 2020
- Bulletin: Westpac Can Handle Higher Credit Loss Provisions, May 4, 2020
- Banking Industry Country Risk Assessment Update: April 2020, May 1, 2020
- Bulletin: ANZ's Dividend Deferral Supportive Of Credit Quality, April 30, 2020
- Research Update: Bank of South Pacific Ltd. Long-Term Rating Lowered To 'B-' Following Sovereign Downgrade; Outlook Stable, April 29, 2020
- Nearly All Australian Bank Ratings Can Withstand Rising Economic Risks, Credit Losses, April 29, 2020
- Outlook On Indonesian Banks Revised To Negative As Operating Conditions Worsen; Ratings Affirmed, April 28, 2020
- Bulletin: NAB Bolsters Balance Sheet Against COVID-19 Hits, April 27, 2020
- Bulletin: SPDB Can Withstand COVID-19 Shock, April 24, 2020
- Outlook On Japan's Sumitomo Mitsui Trust Bank Revised Down To Stable As COVID-19 Stalls Gains; 'A/A-1' Ratings Affirmed, April 24, 2020
- How COVID-19 Is Affecting Bank Ratings, April 22, 2020
- Asia-Pacific Credit Conditions Stay Tight As Pandemic Hits Western Economies, April 22, 2020
- Various Rating Actions Taken On Indian NBFCs On Weakening Economic Conditions Due To COVID-19, April 17, 2020
- Rating Actions On Some Indian Banks As Operating Conditions Worsen; Government Support Key For State-Owned Entities, April 17, 2020
- China Banks After COVID-19: Big Get Bigger, Weak Get Weaker, April 17, 2020
- Research Update: Outlooks On Bangkok Bank, Bank of Ayudhya Revised To Stable From Positive Following Sovereign Action; Ratings Affirmed, April 14, 2020
- Major Australian Banks And Macquarie Bank Outlooks Revised To Negative, Mirroring Sovereign Outlook; Ratings Affirmed, April 8, 2020
- For Asia-Pacific Banks, COVID-19 Crisis Could Add US$300 Billion To Credit Costs, April 6, 2020
- Scenario and Sensitivity Analysis: Australian Banks Resilient To COVID-19 Crisis, April 1, 2020
- New Zealand Banks Buckle Down For Lockdown, March 31, 2020
- Bulletin: COVID-19 Will Stretch CCB's Performance But Fundamentals Are Resilient, March 30, 2020
- Asia-Pacific Credit Conditions Will Be As Bad As In 1997, Report Says, March 30, 2020
- COVID-19 Hits Indonesia Banks On Multiple Fronts, March 26, 2020
- Downside Risks To Australian Property Prices Not Yet Alarming For Banks, March 25, 2020
- Banking Industry Country Risk Assessment Update: March 2020, March 21, 2020
- RBA's A$90 Billion Funding Salvo Softens COVID-19 Blow For Australian Banks, March 20, 2020
- Sector Review: Taiwan Securities Firms Diverge Strategies To Compete, March 18, 2020
- Australian Banks Can Absorb COVID-19 Shocks, March 17, 2020
- Credit FAQ: AT1s--The Great Indian Divide, March 13, 2020
- Bulletin: Shriram Transport Finance Can Absorb Yes Bank Hybrid Exposure Loss, March 9, 2020
- India's Yes Bank Bailout May Have Painful Side Effects, March 9, 2020
- COVID-19 Means Another Year Of Single-Digit Loan Growth For Philippine Banks, March 9, 2020
- NPLs To Rise For Malaysian Banks As Political Uncertainty Adds To COVID-19 Blow, March 5, 2020
- Bulletin: Coronavirus May Delay Standard Chartered's Earnings Recovery, Feb. 27, 2020
- Outlook On Japan’s Norinchukin Bank Revised To Negative On Falling Earnings; Ratings Affirmed, Feb. 25, 2020
- Report Looks Into What Lower For Longer Means For Japanese And European Banks, Feb. 19, 2020
- More Distress, Less Dominance For China's D-AMCs, Feb. 18, 2020
- Bulletin: CBA's Strong Retail Franchise Offsets Tough Operating Conditions, Feb. 12, 2020
- ESG Industry Report Card: Asia-Pacific Banks, Feb. 12, 2020
- New D-SIBs Rules Raise Malaysian Banks' M&A Costs, Feb. 10, 2020
- Coronavirus Impact: Taiwan's Financial Sectors Can Stave Off The Threat For Now, Feb. 7, 2020
- Tech Disruption In Retail Banking: Better Late Than Never For Japanese Fintech, Feb. 6, 2020
- Coronavirus Will Test The Resilience Of Thai Banks, Feb. 5, 2020
- Coronavirus Spells More Trouble For Hong Kong Banks, Feb. 3, 2020
- Singapore Banks Can Draw On Buffers As Coronavirus Spreads, Feb. 3, 2020
- Higher Credit Costs And Slower Growth Weigh On Indonesian Banks' Performance, Jan. 29, 2020
- Japan Banking Outlook 2020: Buckle Down For Major Turbulence, Jan. 22, 2020
- Banks In Emerging Markets: 15 Countries, Three Main Risks, Jan. 20, 2020
- Global Trade At A Crossroads: U.S.-China "Phase One" Deal Is Mildly Positive As Bulk Of Tariffs Remain, Jan. 16, 2020
- Outlook On Sri Lanka Banks Revised To Negative Following Weakening Sovereign Credit Factors, Jan. 14, 2020
- Australian Banks' Credit-Loss Rise From Bushfires Should Be Modest, Jan. 13, 2020
- Lower, Longer, Fatter: A Conversation On Asia-Pacific Credit, Jan. 9, 2020
Economic, Sovereign, And Other Research
- Economic Research: Jobs And The Climb Back From COVID-19, April 20, 2020
- Economic Research: Up Next: The Complicated Transition From COVID-19 Lockdown, April 17, 2020
- Economic Research: COVID-19 Deals A Larger, Longer Hit To Global GDP, April 16, 2020
- Asia-Pacific Economic Forecasts: The Cost Of Coronavirus Is Now US$620 Billion, March 23, 2020
- Economic Research: Asia-Pacific Recession Guaranteed, March 17, 2020
- Economic Research: COVID-19 Macroeconomic Update: The Global Recession Is Here And Now, March 17, 2020
- Bulletin: Australia Can Hold On To 'AAA' Rating Even As Recession Looms, March 11, 2020
- Economic Research: COVID-19 Now Threatens More Damage To Asia-Pacific, March 5, 2020
- Local Government Debt 2020: Australian States' Borrowing Climbs Toward A$300 Billion, March 5, 2020
- Economic Research: COVID-19 Will Hit Asia-Pacific Economies Hard, Feb. 19, 2020
- New Zealand Councils Can Carry Growing Debt, Feb. 17, 2020
- Bulletin: Australia's Strong Public Finances Provide Some Immunity To Coronavirus Shock, Feb. 13, 2020
- Coronavirus To Inflict A Large, Temporary Blow To China's Economy, Feb. 7, 2020
- Coronavirus In China: Early Thoughts On The Economic Impact, Jan. 23, 2020
- Australia Sovereign And State Ratings Can Accommodate Bushfire Impact, Jan. 13, 2020
Ratings Methodology News
- Guidance | Criteria | Financial Institutions | Other: Alternative Investment Funds Methodology, Jan. 13, 2020
- Criteria | Financial Institutions | Other: Alternative Investment Funds Methodology, Jan. 13, 2020
Webcasts: Asia-Pacific Banking Insights
In the last quarter, we have held the following webcasts to share our views on Asia-Pacific and other banking topics. The replays are available on https://www.spglobal.com/ratings/en/events/webcast-replays/index#
- Webinar Replay: How Thai Credits Will Ride Out This Pandemic Storm? May 5, 2020
- Webinar Replay: Credit Updates On The Indonesian Sovereign, State-Owned Companies & Indonesian Banks, April 29, 2020
- Webinar Replay: Global Banking Outlook - Asia-Pacific And European Banking Sectors, April 29, 2020
- Webinar Replay: COVID-19: Impact on Australian Sovereign, State Governments & Major Banks, April 9, 2020
- Webinar Replay: Coronavirus Insights Asia-Pacific Monday Credit Focus, April 6, 2020
- Webcast Replay: COVID-19 Means Another Year Of Single-Digit Loan Growth For Philippine Banks, March 11, 2020
- Tech Disruption In Retail Banking: Better Late Than Never For Japanese Fintech, Feb. 26, 2020
- Webcast Replay: How Are Australian Bushfires Affecting Creditworthiness Across Various Sectors, Jan. 15, 2020
BICRA Changes
Over the past quarter, we made the following changes to our Banking Industry Country Risk Assessments (BICRAs):
Papua New Guinea
We revised our economic risk trend for Papua New Guinea (PNG) to negative from stable. PNG's already weak economy faces additional downward pressure from delays to key resource sector projects, low global energy prices, and COVID-19 driven lockdowns--all of which are suppressing demand for domestic goods and services. In our view, economic risks for PNG's banking system could reach a level more akin to weaker banking systems such as Nigeria and Ukraine.
We believe there is an increasing risk of higher nonperforming loans and credit losses, beyond our base case, if weak conditions persist. In our view, PNG is a high-risk banking system by global standards. As the COVID-19 pandemic continues against a backdrop of volatile markets and growing credit stress, we expect a global recession for calendar 2020. The global slowdown and quarantine restrictions are weighing on oil and gas prices, which will have a flow-on effect on PNG government revenues, and economic growth forecasts.
Australia
We revised our economic risk trend for Australia to negative from stable. We consider that there is a one-in-three likelihood in the next two years that we assess the economic risk score as having worsened by one category within our BICRA for Australia. This could occur if we foresee the economic downturn--or its impact on the banking sector--becoming significantly more prolonged or severe than our current forecasts. For example, if we consider that the credit losses are likely to rise substantially above our current forecasts; or if we see indications of structural weaknesses in the important factors driving the credit risks in the economy such as the financial strength of the corporate sector or underwriting standards followed by the banks.
India
We revised our economic risk trend for India to negative from stable. In our view, the economic risk for Indian financial institutions is rising. Economic conditions have turned adverse due to the COVID-19 pandemic. Drastic efforts to curtail the spread of the coronavirus have resulted in a sudden stoppage in economic activity. We have further revised downward our fiscal 2021 GDP growth projections for India to 1.8%, compared with our earlier expectation of 3.5%. We believe this decline is a cyclical event and India's structural growth story is intact. Economic growth should return to 7% levels in the medium term. We are projecting 7.5% growth in fiscal 2022, albeit from a small base. However, a prolonged slowdown, particularly if the recovery in fiscal 2022 is significantly slower or delayed, could adversely affect the financial institutions sector.
Indonesia
We revised our economic risk trend for Indonesia to negative from stable. In our view, the economic risk for Indonesian banks is rising due to the COVID-19 pandemic, which has affected tourism, transport, trade, manufacturing, and investment in the country. The pandemic is also hurting private consumption, which accounts for almost 60% of Indonesia's GDP, given the social distancing measures imposed to contain the outbreak. We estimate Indonesia's economic growth will decelerate to 1.8% in 2020, compared with 5% in 2019.
We could lower our economic risk assessment for Indonesia's banking sector if the COVID-19 pandemic worsens or drags on for longer, leading to significantly slower economic growth compared with our forecast, translating to higher-than-expected nonperforming assets and credit losses. We could also lower our assessment if the rupiah depreciates further and remains at that level for an extended period, resulting in a further weakening of Indonesia's external position or higher delinquencies among corporate borrowers, which may affect banks. Although the rupiah has shown some signs of stability and strengthening in recent weeks, further depreciation due to the turmoil in financial markets could be a risk for the banking system.
Sri Lanka
We have revised our economic risk trend for Sri Lanka to negative from stable. We also revised our industry risk trend to negative from stable. These revisions reflect that we consider it unlikely that Sri Lankan financial institutions would be immune to increasing credit pressures on the sovereign and the broader operating environment. The weak operating environment could manifest in various forms and make the banks more susceptible to exogenous shocks. It may lead to rising credit risk in Sri Lanka, particularly if the country's economic growth is lower than our current base-case expectations. It may also lead to lack of investor confidence in the banking system and hurt banks' prospects of raising external debt. The funding profile of the system may also deteriorate, leading to increased competition for funds. All of these factors could affect banks' profitability, and therefore the competitive dynamics of the banking system.
Chart 1
Chart 2
Chart 3
Table 2
| 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 | ||||||||||||||||||||||
| Australia and New Zealand Banking Group Ltd. | AA-/Negative | bbb+ | Strong | Strong | Adequate | Avg/Adequate | a | Sys. Imp. | 2 | 0 | ||||||||||||
| Commonwealth Bank of Australia | AA-/Negative | bbb+ | Strong | Strong | Adequate | Avg/Adequate | a | Sys. Imp. | 2 | 0 | ||||||||||||
| Macquarie Bank Ltd. | A+/Negative | bbb+ | Adequate | Strong | Adequate | Avg/Adequate | a- | Sys. Imp. | 2 | 0 | ||||||||||||
| National Australia Bank Ltd. | AA-/Negative | bbb+ | Strong | Strong | Adequate | Avg/Adequate | a | Sys. Imp. | 2 | 0 | ||||||||||||
| Westpac Banking Corp. | AA-/Negative | bbb+ | Strong | Strong | Adequate | Avg/Adequate | a | Sys. Imp. | 2 | 0 | ||||||||||||
| China | ||||||||||||||||||||||
| 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-/Stable | bb+ | Strong | Adequate | Adequate | Above Avg/Adequate | bbb- | GRE | 3 | 0 | ||||||||||||
| China CITIC Bank Co. Ltd. | BBB+/Stable | 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+/Stable | bb+ | Strong | Moderate | Strong | Above Avg/Adequate | bbb | Sys. Imp. | 1 | 0 | ||||||||||||
| China Minsheng Banking Corp. Ltd. | BBB-/Stable | 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 | ||||||||||||
| Hong Kong | ||||||||||||||||||||||
| 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 | ||||||||||||
| India | ||||||||||||||||||||||
| Axis Bank Ltd. | BBB-/Negative | bbb- | Strong | Adequate | Moderate | Avg/Adequate | bbb- | None | 0 | 0 | ||||||||||||
| Bank of India | BB+/Stable | bbb- | Adequate | Moderate | Weak | Above Avg/Strong | bb | GRE | 1 | 0 | ||||||||||||
| HDFC Bank Ltd. | BBB-/Stable | bbb- | Strong | Adequate | Adequate | Above Avg/Strong | bbb+ | None | 0 | (2) | ||||||||||||
| ICICI Bank Ltd. | BBB-/Negative | bbb- | Strong | Adequate | Moderate | Avg/Adequate | bbb- | None | 0 | 0 | ||||||||||||
| State Bank of India | BBB-/Stable | bbb- | Strong | Moderate | Moderate | Above Avg/Strong | bbb- | None | 0 | 0 | ||||||||||||
| Indonesia | ||||||||||||||||||||||
| 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 | ||||||||||||
| Japan | ||||||||||||||||||||||
| Chiba Bank Ltd. | A/Negative | bbb+ | Adequate | Adequate | Strong | Avg/Strong | a- | None | 0 | 1 | ||||||||||||
| 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 Bank Ltd. | A/Stable | bbb+ | Adequate | Moderate | Adequate | Above Avg/Strong | bbb+ | Sys. Imp. | 2 | 0 | ||||||||||||
| Shinkin Central Bank | A/Stable | bbb+ | Adequate | Adequate | Adequate | Avg/Strong | bbb+ | Sys. Imp. | 2 | 0 | ||||||||||||
| Shizuoka Bank Ltd. | A/Negative | bbb+ | Adequate | Strong | Adequate | Avg/Strong | a- | None | 0 | 1 | ||||||||||||
| 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 | ||||||||||||
| Korea | ||||||||||||||||||||||
| 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/Positive | bbb+ | Strong | Adequate | Moderate | Avg/Adequate | bbb+ | Sys. Imp. | 2 | 0 | ||||||||||||
| Malaysia | ||||||||||||||||||||||
| Public Bank Bhd. | A-/Stable | bbb | Strong | Adequate | Strong | Above Avg/Strong | a | None | 0 | (1) | ||||||||||||
| Malayan Banking Bhd. | A-/Stable | bbb | Strong | Adequate | Adequate | Above Avg/Strong | a- | None | 0 | 0 | ||||||||||||
| CIMB Bank Bhd. | A-/Stable | bbb | Strong | Adequate | Adequate | Above Avg/Strong | a- | None | 0 | 0 | ||||||||||||
| New Zealand | ||||||||||||||||||||||
| ANZ Bank New Zealand Ltd. | AA-/Negative | bbb | Strong | Strong | Adequate | Avg/Adequate | a- | Group | 3 | 0 | ||||||||||||
| ASB Bank Ltd. | AA-/Negative | bbb | Strong | Strong | Adequate | Avg/Adequate | a- | Group | 3 | 0 | ||||||||||||
| Bank of New Zealand | AA-/Negative | bbb | Strong | Adequate | Adequate | Avg/Adequate | bbb+ | Group | 4 | 0 | ||||||||||||
| Westpac New Zealand Ltd. | AA-/Negative | bbb | Strong | Strong | Adequate | Avg/Adequate | a- | Group | 3 | 0 | ||||||||||||
| Singapore | ||||||||||||||||||||||
| 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 | ||||||||||||
| Taiwan | ||||||||||||||||||||||
| 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. | 1 | 0 | ||||||||||||
| Thailand | ||||||||||||||||||||||
| Bangkok Bank Public Co. Ltd. | BBB+/Stable | bb+ | Strong | Adequate | Adequate | Above Avg/Strong | bbb | Sys. Imp. | 1 | 0 | ||||||||||||
| KASIKORNBANK PCL | BBB+/Stable | bb+ | Strong | Adequate | Adequate | Avg/Strong | bbb- | Sys. Imp. | 2 | 0 | ||||||||||||
| Krung Thai Bank Public Co. Ltd. | BBB/Stable | bb+ | Adequate | Moderate | Adequate | Avg/Adequate | bb+ | Sys. Imp. | 2 | 0 | ||||||||||||
| Siam Commercial Bank Public Co. Ltd. | BBB+/Stable | bb+ | Strong | Adequate | Adequate | Avg/Strong | bbb- | Sys. Imp. | 2 | 0 | ||||||||||||
| Data as of May 8, 2020. 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. | ||||||||||||||||||||||
Table 3
| Recent Rating Actions: Asia Pacific Banks | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Release date | Org legal name | Org country | From | To | ||||||
| 6-May-20 | Kiwibank Ltd. | New Zealand | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 29-Apr-20 | Bank of South Pacific Ltd. | Papua New Guinea | B/Stable/B | B-/Stable/B | ||||||
| 29-Apr-20 | Fubon Bank (China) Co. Ltd. | China | BBB+/Stable/A-2 | BBB+/Negative/A-2 | ||||||
| 28-Apr-20 | PT Bank Rakyat Indonesia (Persero) Tbk. | Indonesia | BBB-/Stable/A-3 | BBB-/Negative/A-3 | ||||||
| 28-Apr-20 | PT Bank Negara Indonesia (Persero) Tbk. | Indonesia | BBB-/Stable/A-3 | BBB-/Negative/A-3 | ||||||
| 28-Apr-20 | PT Bank Mandiri (Persero) | Indonesia | BBB-/Stable/A-3 | BBB-/Negative/A-3 | ||||||
| 27-Apr-20 | The Master Trust Bank of Japan Ltd. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 27-Apr-20 | Japan Trustee Services Bank, Ltd. | Japan | A-/Positive/A-2 | A-/Stable/A-2 | ||||||
| 27-Apr-20 | Trust & Custody Services Bank, Ltd. | Japan | A-/Positive/A-2 | A-/Stable/A-2 | ||||||
| 24-Apr-20 | Sumitomo Mitsui Trust Bank Ltd. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Sumitomo Mitsui Banking Corp. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Sumitomo Mitsui Financial Group Inc. | Japan | A-/Positive/-- | A-/Stable/-- | ||||||
| 24-Apr-20 | Sumitomo Mitsui Banking Corp. (China) Ltd. | China | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Mitsubishi UFJ Trust and Banking Corp. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Mizuho Trust & Banking Co. Ltd. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Mizuho Bank Ltd. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Mitsubishi UFJ Financial Group, Inc. | Japan | A-/Positive/-- | A-/Stable/-- | ||||||
| 24-Apr-20 | Mizuho Financial Group Inc. | Japan | A-/Positive/-- | A-/Stable/-- | ||||||
| 24-Apr-20 | MUFG Bank Ltd. | Japan | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | Mizuho Bank (China) Ltd. | China | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 24-Apr-20 | MUFG Bank (China) Ltd. | China | A/Positive/A-1 | A/Stable/A-1 | ||||||
| 23-Apr-20 | Rabobank New Zealand Ltd. | New Zealand | A/Stable/A-1 | A/Negative/A-1 | ||||||
| 17-Apr-20 | ICICI Bank Ltd. | India | BBB-/Stable/A-3 | BBB-/Negative/A-3 | ||||||
| 17-Apr-20 | Axis Bank Ltd. | India | BBB-/Stable/A-3 | BBB-/Negative/A-3 | ||||||
| 14-Apr-20 | Bangkok Bank Public Co. Ltd. | Thailand | BBB+/Positive/A-2 | BBB+/Stable/A-2 | ||||||
| 14-Apr-20 | Bank of Ayudhya Public Co. Ltd. | Thailand | BBB+/Positive/A-2 | BBB+/Stable/A-2 | ||||||
| 7-Apr-20 | Commonwealth Bank of Australia | Australia | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | ASB Bank Ltd. | New Zealand | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | ASB Finance Ltd. | New Zealand | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | National Australia Bank Ltd. | Australia | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | Australia and New Zealand Banking Group Ltd. | Australia | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | Bank of New Zealand | New Zealand | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | Macquarie Bank Ltd. | Australia | A+/Stable/A-1 | A+/Negative/A-1 | ||||||
| 7-Apr-20 | ANZ Bank New Zealand Ltd. | New Zealand | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | Macquarie International Finance Ltd. | Australia | A/Stable/A-1 | A/Negative/A-1 | ||||||
| 7-Apr-20 | Australia and New Zealand Bank (China) Co. Ltd. | China | A+/Stable/A-1 | A+/Negative/A-1 | ||||||
| 7-Apr-20 | Westpac Banking Corp. | Australia | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 7-Apr-20 | Westpac New Zealand Ltd. | New Zealand | AA-/Stable/A-1+ | AA-/Negative/A-1+ | ||||||
| 12-Mar-20 | G&C Mutual Bank Ltd. | Australia | BBB-/Positive/A-3 | BBB/Stable/A-2 | ||||||
| 25-Feb-20 | Norinchukin Bank | Japan | A/Stable/A-1 | A/Negative/A-1 | ||||||
| 25-Feb-20 | Norinchukin Australia Pty Ltd. | Australia | A/Stable/A-1 | A/Negative/A-1 | ||||||
| 30-Jan-20 | Suncorp-Metway Ltd. | Australia | A+/Stable/A-1 | A+/Positive/A-1 | ||||||
| 24-Jan-20 | Aozora Bank Ltd. | Japan | A-/Negative/A-2 | BBB+/Negative/A-2 | ||||||
| 14-Jan-20 | DFCC Bank | Sri Lanka | B/Stable/B | B/Negative/B | ||||||
| 14-Jan-20 | National Savings Bank | Sri Lanka | B/Stable/B | B/Negative/B | ||||||
| *Recent rating actions are for the period Jan. 1, 2020 to May 8, 2020. 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. | ||||||||||
This report does not constitute a rating action.
| Primary Credit Analyst: | Gavin J Gunning, Melbourne + 61 3 9631 2092; gavin.gunning@spglobal.com |
| Secondary Contacts: | Vera Chaplin, Melbourne (61) 3-9631-2058; vera.chaplin@spglobal.com |
| Ryoji Yoshizawa, Tokyo (81) 3-4550-8453; ryoji.yoshizawa@spglobal.com | |
| Ivan Tan, Singapore (65) 6239-6335; ivan.tan@spglobal.com | |
| Geeta Chugh, Mumbai (91) 22-3342-1910; geeta.chugh@spglobal.com | |
| Harry Hu, CFA, Hong Kong (852) 2533-3571; harry.hu@spglobal.com | |
| Sharad Jain, Melbourne (61) 3-9631-2077; sharad.jain@spglobal.com | |
| Nico N DeLange, Sydney (61) 2-9255-9887; nico.delange@spglobal.com | |
| Daehyun Kim, CFA, Hong Kong (852) 2533-3508 ; daehyun.kim@spglobal.com | |
| HongTaik Chung, CFA, Hong Kong (852) 2533 3597; hongtaik.chung@spglobal.com | |
| Eunice Fan, Taipei (8862) 8722-5818; eunice.fan@spglobal.com | |
| Chizuru Tateno, Tokyo (81) 3-4550-8578; chizuru.tateno@spglobal.com | |
| Fern Wang, CFA, Hong Kong (852) 2533-3536; fern.wang@spglobal.com | |
| Ryan Tsang, CFA, Hong Kong (852) 2533-3532; ryan.tsang@spglobal.com | |
| Lisa Barrett, Melbourne (61) 3-9631-2081; lisa.barrett@spglobal.com | |
| Research Assistant: | Priyal Shah, CFA, Mumbai |
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