Fitch Ratings expects the eight strongest banks in Asia-Pacific to “maintain sound profiles despite the current credit-cycle downturn”.
These are specifically Hongkong and Shanghai Banking Corporation (HKSB), National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking (ANZ), Westpac Banking Corporation (Westpac), DBS Group (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB).
In a Monday report, Fitch Ratings analysts say that home-market dominance is a key feature of all the banks featured. This comes on top of stable, transparent and traditional business models that underpin the banks’ strong and sustainable profitability as well as a broadly conservative risk appetite.
All eight banks currently hold the fourth-highest ‘aa-’ viability rating, which is Fitch’s measure of intrinsic strength. They are also expected to continue accreting capital from retained earnings.
HKSB & Singapore banks set for foreign expansion
Fitch projects HKSB, together with the Singapore banks (DBS, OCBC and UOB), to continue expanding their foreign operations more quickly than the rest.
HKSB’s operations have been identified as the most diversified and complex, as the group spans 20 markets, with its domestic lending accounting for 61% of the total at end-2015. “We see HKSB’s liquidity as superior to that of its peers due to its low loan-to-deposit ratio and access to resources from its parent,” adds Fitch.
Similarly, Singapore banks have demonstrated strong domestic deposit franchises as their deposits accounted for up to 90% of total funding. Although they have “meaningful commodity exposure”, Fitch views the effect of commodity-price weakness on their credit quality as “moderate” because of “sound underwriting and collateral”. The research house expects the same to hold true for HKSB as it is the most exposed to China among the eight ‘aa-’ rated banks.
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These are specifically Hongkong and Shanghai Banking Corporation (HKSB), National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking (ANZ), Westpac Banking Corporation (Westpac), DBS Group (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB).
In a Monday report, Fitch Ratings analysts say that home-market dominance is a key feature of all the banks featured. This comes on top of stable, transparent and traditional business models that underpin the banks’ strong and sustainable profitability as well as a broadly conservative risk appetite.
All eight banks currently hold the fourth-highest ‘aa-’ viability rating, which is Fitch’s measure of intrinsic strength. They are also expected to continue accreting capital from retained earnings.
HKSB & Singapore banks set for foreign expansion
Fitch projects HKSB, together with the Singapore banks (DBS, OCBC and UOB), to continue expanding their foreign operations more quickly than the rest.
HKSB’s operations have been identified as the most diversified and complex, as the group spans 20 markets, with its domestic lending accounting for 61% of the total at end-2015. “We see HKSB’s liquidity as superior to that of its peers due to its low loan-to-deposit ratio and access to resources from its parent,” adds Fitch.
Similarly, Singapore banks have demonstrated strong domestic deposit franchises as their deposits accounted for up to 90% of total funding. Although they have “meaningful commodity exposure”, Fitch views the effect of commodity-price weakness on their credit quality as “moderate” because of “sound underwriting and collateral”. The research house expects the same to hold true for HKSB as it is the most exposed to China among the eight ‘aa-’ rated banks.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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