Key Takeaways
- Economies are recovering, but banks may need years to fully recover from the effects of COVID-19.
- We maintain a negative outlook on the ratings on nearly one in five financial institutions in Asia-Pacific.
- Extraordinary risk management missteps by some lenders in the past quarter add to the challenges they face during the recovery from the pandemic.
Credit conditions have improved for Asia-Pacific banks over the past quarter. Economies are recovering smartly, countries are rolling out vaccinations, and regional financing circumstances remain supportive. And yet, the pandemic has so seriously set back the finances of households and corporates, with deeply negative effects on lenders, S&P Global Ratings expects banks may need years to fully recover.
Public authorities across Asia-Pacific have blunted the economic effects of COVID-19. This includes an unprecedented level of fiscal and monetary policy support for households and corporates, and measures to encourage banks to lend and to show forbearance toward stressed borrowers. But for this support, the hit on the Asia-Pacific financial institutions sector would have been much more significant. Our outlooks on the ratings on about 18% of financial institutions in Asia-Pacific were negative as of end-March 2021.
Should the effect of COVID-19 on Asia-Pacific financial institutions become worse or last longer than we now assume, then this could lead to more rating downgrades. Were a sustainable recovery to take hold, however, we could eventually revise many of the outlooks on bank ratings back to stable.
Public authorities will likely continue to have a key effect on banking sector creditworthiness over the next six to 18 months. They must maintain a delicate balancing act of not withdrawing support too early or, alternatively, not overshooting.
Among many challenges, financial institutions must reckon with the eventual end of support by public authorities (for more discussion see also "How COVID-19 Is Affecting Bank Ratings: March 2021 Update," published March 11, 2021, on RatingsDirect).
On the economic front, the scenario in Asia-Pacific has improved over the past quarter. We upgraded our growth forecasts for Asia-Pacific to 7.3% for 2021, from 6.8% previously. A faster-than-expected global vaccine rollout, a large dose of U.S. stimulus, and upside surprises in trade and manufacturing have pushed our forecasts higher and offset recent weakness in household spending.
Chinese GDP should grow 8% in 2021 (up from our previous forecast of 7%) on stronger trade and real estate activity. Our latest forecast has Indian GDP expanding 11% (up from 10%), due to a fast economic reopening and fiscal stimulus. Japan stays at 2.7% in 2021, but exports may present upside risks (see table 1).
Our forecast growth of 11% for India in 2021 is followed by a 6.1%-6.4% forecast increase for the next couple of years. The control of COVID-19 remains a key risk for the economy. New infections have spiked in recent weeks and the country is in the middle of a second pandemic wave. Some targeted lockdowns have already been implemented and more will likely be needed. The impact of broader lockdowns on the economy could be substantial, depending on their length and scope.
In Asia-Pacific, the recovery will likely be uneven, and the climb back steeper for some. We revised emerging market growth lower on a delayed but not necessarily derailed recovery. Regionally, the pandemic and higher real bond yields present downside risks. Improving external demand, a domestic consumption boom, and productivity gains count for the upside risks (see "Economic Outlook Asia-Pacific Q2 2021: Three-Speed Recovery Will Benefit From Faster Global Growth," March 25, 2021).
Credit conditions across Asia-Pacific are strengthening with the upgraded economic backdrop and COVID-19 situations. However, this improvement is uneven across sectors and borrower profiles. Geographically, Indonesia, Malaysia, Philippines, and Thailand are lagging (see "Credit Conditions Asia-Pacific Q2 2021: Uneven Recovery," March 30, 2021, and "Sector Roundup Asia-Pacific Q2 2021: The Climb Back Is Steeper For Some," April 12, 2021).
Effective Risk Management Is Integral To Financial Strength
Notwithstanding an economic turnaround in some jurisdictions from COVID-19-induced slumps, some prominent risk management problems have emerged in the quarter. These highlighted the critical importance of effective risk management when assessing financial strength, regardless of what stage we are at in an economic cycle.
Toward the end of the first quarter of 2021, Archegos Capital Management came under pressure after some of its concentrated long positions declined precipitously. The price effects prompted the banks financing those positions through their prime brokerages to require additional margin. When the family office could no longer make margin calls, some of the banks closed out their positions, liquidating collateral and hedges, further pressuring the price of the stocks involved.
Although it's unclear whether all of the banks' collateral and hedges have been liquidated at this juncture, according to press and company announcements, at least two of the banks that helped facilitate these trades--Credit Suisse Group AG (A+/Negative/A-1) and Nomura Holdings Inc. (BBB+/Stable/A-2)--are facing significant losses on the sale of their collateral (see "Capital Markets Revenue Should Remain Robust For Global Banks In 2021 Despite Risks," April 8, 2021).
Our negative outlook on our ratings on Credit Suisse reflect our view that potential material losses may stem from deficiencies in the group's risk management system or risk appetite that are not reflected in the current ratings. (see "Research Update: Credit Suisse Outlook Revised To Negative On Concerns About The Group's Risk Management," March 30, 2021, and "Bulletin: Outsized Hedge Fund Exposure Pushes Credit Suisse To A First-Quarter Loss," April 6, 2021).
The loss has not immediately affected our outlook or ratings on Nomura, whose stand-alone credit profile (SACP) and operating company rating is lower than our rating on Credit Suisse. Nomura likely has enough earnings and capital to absorb losses related to Archegos at the current rating level. This assumption incorporates an expectation of some earnings volatility (see "Bulletin: Nomura Can Absorb $2 Billion Shock," March 29, 2021).
Uncertainties over the core credit metrics on China Huarong Asset Management Co. Ltd.'s (CHAMC; BBB+/WatchNeg/A-2) caused by a delay in release of its 2020 earnings led us to place the issuer credit ratings on CHAMC and its subsidiaries on CreditWatch with negative implications. The company announced on March 31, 2021, that the delay was because the auditor needed more time and information to finalize its review of a transaction (see "Huarong Flags China Transparency And State Support Risks," April 21, 2021.
CHAMC has yet to officially release further details on the transaction, or on the expected date for completion of the audit. While the transaction could enhance CHAMC's credit metrics, on balance, the downside risk is likely higher. This is because the company's operating performance and asset quality were weaker than that of peers' in recent years, largely due to legacy exposures associated with its ex-chairman.
We continue to view CHAMC as a government-related entity with a very high likelihood of extraordinary government support. In addition, the government will likely step in if the SACP of CHAMC significantly worsens, particularly if it hits market confidence. However, uncertainties remain regarding on the manner, timeliness, or extent to which the government may provide support under such scenarios.
We should resolve the CreditWatch once there is greater clarity on CHAMC's financial ratios and credit risk metrics (see "Research Update: China Huarong Asset Management, Subsidiaries Placed On CreditWatch Negative Following Delayed Results," April 9, 2021).
An instance of regulatory action based on historical breaches of prudential and reporting standards have surfaced for Australia-based Macquarie Bank Ltd. (MBL; A+/Negative/A-1). In response, the Australian Prudential Regulation Authority (APRA) increased liquidity and operational risk capital requirements for MBL.
In our view, MBL has the capital and liquidity to comply with the increased regulatory requirement. APRA has stated that the historical breaches do not affect the soundness of Macquarie Group Ltd.'s capital or liquidity. We expect MBL to remain strongly capitalized, maintaining a risk-adjusted capital ratio well above 10% (based on S&P Global Ratings' framework) (see "Bulletin: Macquarie Has Financial Capacity To Comply With Regulatory Breaches," April 1, 2021).
Australian Banks Are Ready To Leave LIBOR
Australia's banks are on track for a smooth shift away from interbank offered rates (IBOR) to alternative risk-free reference rates. Like their international counterparts, the move poses challenges for Australia's lenders, but the availability of a well-trusted local benchmark tempers the risks, in our view.
Unlike in the U.S. and Europe, Australia's regulators are not proposing a wholesale shift to referencing an alternative risk-free rate. This is because the Bank Bill Swap Rate (BBSW)--the Australian IBOR benchmark--remains robust.
The key difference between Australia and other IBOR jurisdictions is that Australia's active bank bill market means daily transaction volumes are high enough to calculate a meaningful interest-rate benchmark. Past concerns over rate manipulation has led to considerable improvements in the calculation methodology for BBSW in recent years. ASX Ltd., which operates Australia's dominant securities exchange, now independently calculates BBSW, referencing realized spreads in the Australian interbank market.
Australia's major banks have established transition programs, have dedicated teams in place, and are on track to manage the IBOR handoff by Dec. 31, 2021. They have identified IBOR exposures, put mitigation strategies in place, and set concrete timelines for migration milestones.
Smaller banks are likely not as advanced, but they also have significantly smaller IBOR exposure. As such, the risk of a disorderly transition is remote. It should have no effect on the funding, competitive dynamics, or institutional framework settings of the Australian banking system (see "Losing LIBOR: Australia Banks On A Smooth Transition," Feb. 24, 2021).
Traditional Banks Turn Up The Heat In The Digitalization Drive
COVID-19 has shifted customer preferences toward digital offerings. This made it more urgent for traditional banks to launch their own virtual operations, or strengthen their existing digital capabilities. During the pandemic, traditional lenders widened their digital offerings, rationalized their branch networks, integrated their service offerings into the customer ecosystems and increased their focus on cost efficiencies.
In contrast, what was shaping up pre-COVID-19 as a moment of glory for virtual banks is turning into an ordeal for some. The economic malaise has hit many lenders, but the less established institutions are often more vulnerable. The virtual-only banks have a low market share relative to traditional banks. In many cases, virtual banks have highly concentrated business profiles. They often need to pay higher interest rates to attract deposits, and have small, unseasoned lending books.
The outbreak has exposed gaps in the business model of some virtual-only banks. Many will likely need to revamp their strategies or find a stronger partner with which to merge. Traditional banks are likely to set up, buy or otherwise partner with pure virtual banks to jumpstart their digital banking operations.
The health crisis has likely reset the digital competition, with the new entrants under strain at a vulnerable moment, and with traditional players aiming vast resources at digital services (see "The Future Of Banking: The Incumbents Strike Back," March 16, 2021).
Westpac Is Contemplating A Demerger Of New Zealand Subsidiary
Australian major bank Westpac Banking Corp. (Westpac) is considering a demerger of its wholly owned New Zealand banking subsidiary, Westpac New Zealand Ltd. (WNZL). This is part of its strategy to simplify its business. We believe that WNZL will likely remain a part of the Westpac group in the next two years. Even if Westpac proceeds with the demerger, its creditworthiness should remain unchanged.
In our opinion, Westpac should continue to offer extraordinary financial support to WNZL, if needed. Nevertheless, the possibility of a reduced strategic importance of WNZL to the Westpac group has increased the downside risks to our ratings on WNZL. We affirmed our 'AA-/A-1+' long- and short-term issuer credit ratings on Westpac and its core subsidiaries, including WNZL.
The outlook on the ratings on Westpac is negative, reflecting a one-in-three likelihood that we will lower our long- and short-term ratings on the bank in the next two years. The negative outlook on our ratings on WNZL reflects the negative outlook on our ratings on Westpac. It also reflects the downside risk of a possible reduction in WNZL's strategic importance to its parent (see "Research Update: Australia's Westpac Banking Group 'AA-' Ratings Affirmed Despite Possible Westpac New Zealand Demerger; Outlook Negative," March 30, 2021).
Economic Recovery In China Ease Profit Strains
The profit growth of China's major banks should recover in the next two years even as COVID-19 related challenges linger for some. Reported nonperforming loans and special mention loan ratios are likely to rise slightly this year as moratorium policies end. (For detailed coverage on bank earnings see entity specific bulletins see Banking Sector Research in this edition of the Asia-Pacific Financial Institutions Monitor).
As vaccine rollouts in several countries continue, S&P Global Ratings believes there remains a high degree of uncertainty about the evolution of the coronavirus pandemic and its economic effects. Widespread immunization, which certain countries might achieve by midyear, will help pave the way for a return to more normal levels of social and economic activity. We use this assumption about vaccine timing in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
Table 1
| The Region's Real GDP Is Rebounding Smartly In 2021 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Percentage change, year over year | ||||||||||||||||||
| Change from November 2020 forecast (%) | ||||||||||||||||||
| 2020 | 2021e | 2022e | 2023e | 2024e | 2021e | 2022e | 2023e | |||||||||||
| Australia | (2.4) | 4.0 | 3.3 | 2.6 | 2.5 | 0.0 | 0.1 | 0.0 | ||||||||||
| China | 2.3 | 8.0 | 5.1 | 5.0 | 4.8 | 1.0 | 0.1 | 0.0 | ||||||||||
| Hong Kong | (6.1) | 4.2 | 3.6 | 2.0 | 1.9 | (0.6) | 0.7 | (0.2) | ||||||||||
| India | (8.0) | 11.0 | 6.1 | 6.3 | 6.4 | 1.0 | 0.1 | 0.1 | ||||||||||
| Indonesia | (2.1) | 4.5 | 5.4 | 5.1 | 5.1 | (0.9) | 0.2 | 0.0 | ||||||||||
| Japan | (4.9) | 2.7 | 2.0 | 1.0 | 0.9 | 0.0 | 0.7 | 0.1 | ||||||||||
| Malaysia | (5.6) | 6.2 | 5.6 | 5.0 | 4.8 | (1.3) | 0.4 | 0.4 | ||||||||||
| New Zealand | (1.2) | 4.2 | 3.0 | 2.9 | 2.8 | (0.1) | 0.1 | 0.0 | ||||||||||
| Philippines | (9.5) | 7.9 | 7.2 | 7.2 | 7.1 | (1.7) | (0.4) | (0.3) | ||||||||||
| Singapore | (5.4) | 5.8 | 3.7 | 2.8 | 2.8 | (0.2) | 0.7 | 0.3 | ||||||||||
| South Korea | (0.9) | 3.6 | 3.1 | 2.5 | 2.5 | 0.0 | (0.1) | (0.1) | ||||||||||
| Taiwan | 3.1 | 4.2 | 2.7 | 2.4 | 2.5 | 1.3 | 0.2 | 0.0 | ||||||||||
| Thailand | (6.1) | 4.2 | 4.5 | 3.6 | 3.7 | (0.8) | 0.6 | 0.0 | ||||||||||
| Vietnam | 2.9 | 8.5 | 7.2 | 6.9 | 6.5 | (2.4) | 0.4 | 0.1 | ||||||||||
| Asia Pacific | (1.6) | 7.3 | 4.9 | 4.6 | 4.5 | 0.5 | 0.2 | 0.0 | ||||||||||
| Note: For India, the year runs April to the following March, e.g., 2020 refers to fiscal 2020/2021, e--Estimate. ending March 31, 2021. ppt--percentage point. Source: "Economic Outlook Asia-Pacific Q2 2021: Three-Speed Recovery Will Benefit From Faster Global Growth," published by S&P Global Ratings on March 25, 2021. | ||||||||||||||||||
Related Research
Banking Sector Research
- Huarong Flags China Transparency And State Support Risks, April 21, 2021
- The Future Of Banking: Can Digital-Only Banks Crack Malaysia?, April 13, 2021
- Malaysian Banking Sector Update: Asset Quality Recovery Delayed Beyond 2021, April 12, 2021
- Sector Roundup Asia-Pacific Q2 2021: The Climb Back Is Steeper For Some, April 12, 2021
- Research Update: China Huarong Asset Management, Subsidiaries Placed On CreditWatch Negative Following Delayed Results, April 9, 2021
- Capital Markets Revenue Should Remain Robust For Global Banks In 2021 Despite Risks, April 8, 2021
- The Future Of Banking: One-Click Deposits (Risks Included), April 8, 2021
- Bulletin: Outsized Hedge Fund Exposure Pushes Credit Suisse To A First-Quarter Loss, April 6, 2021
- Bulletin: AMMB's Private Placement Will Replenish Capital Post 1MDB Settlement, April 5, 2021
- Bulletin: Macquarie Has Financial Capacity To Comply With Regulatory Breaches, April 1, 2021
- Bulletin: Far East Horizon's High Provision And Diversified Operations To Help Profit, April 1, 2021
- Bulletin: Regulatory Action Has Limited Financial Implications For Haitong Securities, April 1, 2021
- Bulletin: AMP CEO Departure Highlights Strategic Challenges, April 1, 2021
- Research Update: Australia's Westpac Banking Group 'AA-' Ratings Affirmed Despite Possible Westpac New Zealand Demerger; Outlook Negative, March 30, 2021
- Credit Conditions Asia-Pacific Q2 2021: Uneven Recovery, March 30, 2021
- Bulletin: BOC Profits To Bounce Back Alongside Economic Rebound, March 30, 2021
- Bulletin: End Of China Loan Forbearance Weighs On Postal Savings Bank's Profit Recovery, March 30, 2021
- Bulletin: Agricultural Bank of China's Capital Can Cushion Against Economic Headwinds, March 30, 2021
- Taiwan Brokers Are Set For Another Good Year, March 30, 2021
- Bulletin: China Construction Bank's Performance Will Gradually Recover Amid Lingering Challenges, March 29, 2021
- Bulletin: China's Economic Recovery To Support Bad Debt Cleanup At ICBC, March 29, 2021
- Bulletin: Nomura Can Absorb $2 Billion Shock, March 29, 2021
- Bulletin: China CITIC Bank's COVID Challenges Will Linger, March 26, 2021
- Banking Industry Country Risk Assessment Update: March 2021, March 25, 2021
- Bulletin: AIA Group's Tie-Up With Bank of East Asia Is A Strategic Boost, March 25, 2021
- The Future Of Banking: The Incumbents Strike Back, March 16, 2021
- How COVID-19 Is Affecting Bank Ratings: March 2021 Update, March 11, 2021
- The Future Of Banking: Cryptocurrencies Are Still Mostly About Speculation, Not Payment, March 8, 2021
- Bulletin: Security Bank's Asset Quality Stress To Stay High, March 4, 2021
- Bulletin: RHB Bank's Asset Quality Risks Could Rise This Year, March 1, 2021
- Bulletin: Sumitomo Mitsui Finance And Leasing Share Sale To Expand Capital Buffer, March 1, 2021
- Bulletin: AMP Capital's Potential JV Could Weigh On Group Creditworthiness, Feb. 26, 2021
- Bulletin: Cost Control, Economic Rebound Put Standard Chartered On Recovery Path, Feb. 25, 2021
- Bulletin: Public Bank Bhd.'s Prudent Risk Management Will Counter COVID Stress, Feb. 25, 2021
- Bulletin: Maybank May Face Asset Quality Hurdles In 2021, Feb. 25, 2021
- Bulletin: United Overseas Bank Well Positioned For Post-COVID Recovery, Feb. 25, 2021
- Bulletin: OCBC's Diversification And Stabilizing Margin Presage Recovery, Feb. 24, 2021
- Weak Demand, Rising Bad Loans May Thwart Indonesia's Easing Aims, Feb. 24, 2021
- Losing LIBOR: Australia Banks On A Smooth Transition, Feb. 24, 2021
- Good Earning Capacity Gives Rated Banks In Emerging Markets A Buffer From COVID-19's Effects, Feb. 22, 2021
- Philippine Banks: Buffers Won't Hold If COVID Comes Back, Feb. 22, 2021
- Bulletin: Australia's Bank of Queensland To Tie The Knot With ME Bank, Feb. 22, 2021
- Bulletin: Orix Corp.'s Proposed Subordinated Bonds Assessed As Having Intermediate Equity Content, Feb. 19, 2021
- Bulletin: Improved Earnings Amid COVID-19 Support Bendigo and Adelaide Bank's Capitalization, Feb. 15, 2021
- Cross-Sector Outlook: India's Escape From COVID, Feb. 16, 2021
- Bulletin: COVID-19, Restructuring, And Remediation Costs Hit AMP Results, Feb. 11, 2021
- Bulletin: DBS Bank Ends 2020 With Signs Of A Business Rebound, Feb. 10, 2021
- Bulletin: Commonwealth Bank of Australia Delivers Solid Earnings Despite COVID-19, Feb. 9, 2021
- The Future Of Banking: Bank Cloud Adoption Goes From Blue Sky Thinking To Economic Necessity, Feb. 8, 2021
- Lower And Later: The Shifting Horizon For Bank Credit Losses, Feb. 2, 2021
- China GDP Recovery, Moratoriums, And Write-Offs Keep Banks' Bad Loans In Check, Feb. 2, 2021
- Ratings Component Scores For The Top 200 Banks Globally, Feb. 2, 2021
- Indonesian Banks Gird For Arduous Recovery From COVID, Feb. 1, 2021
- COVID-19 Accelerates A Digital Shift For U.S. And Canadian Banks, Reports Say, Jan. 28, 2021
- Thai Banks' Resilience Will Be Tested As Moratoriums Expire, Jan. 26, 2021
- Bulletin: Bank of the Philippine Islands' Merger With Thrift Bank Arm Could Add Efficiencies, Jan. 26, 2021
- Securities Firms Should Benefit From Global Economic Recovery In 2021 As Risks Abound, Jan. 21, 2021
- Bulletin: Bajaj Finance Can Absorb A Surge In Provisions, Jan. 21, 2021
- Banks In Emerging Markets: 15 Countries, Three Main Risks, Jan. 19, 2021
- Top-Tier India Banks Lead The Digital Change, Jan. 18, 2021
- Bulletin: Regulatory Ruling Won't Hit Tongchuangjiuding Investment Management's Operations, Jan. 18, 2021
- Japan Banking Outlook 2021: Expect Rising Credit Risks, Jan. 14, 2021
- Fintech Can Revive Japan's Regional Banks, Jan. 14, 2021
- U.S. Bank Outlook 2021: Picking Up The Pieces And Moving On, Jan. 14, 2021
Economic, Sovereign, And Other Research
- Global Economic Outlook Q2 2021: The Recovery Gains Traction As Unevenness Abounds, March 31, 2021
- Economic Outlook Emerging Markets Q2 2021: Tailwinds From Stronger Global Growth, But Several Challenges On The Radar, March 30, 2021
- Economic Outlook Asia-Pacific Q2 2021: Three-Speed Recovery Will Benefit From Faster Global Growth, March 25, 2021
- Economic Research: Orderly Global Reflation Will Support The Recovery From COVID-19, March 22, 2021
- Economic Research: Orderly Global Reflation Will Support The Recovery From COVID-19, March 22, 2021
- Economic Research: Emerging Asia's Recovery Can Withstand A Reflation Trade, March 17, 2021
- Economic Research: China Finally Retires Its "Growth Above All" Policy, March 9, 2021
- Economic Research: Asia, We Have A Demand Problem, Feb. 4, 2021
- Bulletin: India's Bigger Budget Is A Shot In The Arm For The Economy, Feb. 2, 2021
- Economic Research: The Missing Factor In China's Remarkable Recovery, Jan. 19, 2021
Ratings Methodology News
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#
- Malaysian Banking Sector Update: A Delayed Asset Quality Recovery Beyond 2021, April 14, 2021
- Taiwan Banks And Securities Brokers Have Solid Capitalization To Cushion Pandemic Stress, March 31, 2021
- What's New In Asia-Pacific For Virtual Banking And Fintech?, March 17, 2021
- Monthly Asia-Pacific Credit Focus: Shape of Recovery - March 2, 2021
- The Climb Out Of COVID-19 Asia-Pacific Financial Institutions Outlook - Q1 2021 Update, Feb. 10, 2021
BICRA Changes
Over the past quarter, we have made no changes to our Banking Industry Country Risk Assessments (BICRAs)in the Asia-Pacific region.
Table 2
Chart 1
Chart 2
Chart 3
Table 3
| 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. | 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-/Negative | 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 | ||||||||||||
| 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-/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 | ||||||||||||
| 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-/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 | ||||||||||||
| 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+/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 March 31, 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. | ||||||||||||||||||||||
Table 4
| Recent Rating Actions: Asia Pacific Banks | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Release Date | Org Legal Name | Org Country | From | To | ||||||
| March 24, 2021 |
Fubon Bank (China) Co. Ltd. |
China | BBB+/Negative/A-2 | BBB+/Stable/A-2 | ||||||
| March 24, 2021 |
Cathay United Bank (China) Ltd. |
China | BBB+/Negative/A-2 | BBB+/Stable/A-2 | ||||||
| Feb. 22, 2021 |
Members Equity Bank Ltd. |
Australia | BBB/Stable/A-2 | BBB/WatchPos/A-2 | ||||||
| *Recent rating actions are for the period January 1, 2021 to March 31, 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. | ||||||||||
Editor: Jasper Moiseiwitsch
Digital designer: Evy Cheung
This report does not constitute a rating action.
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