Negative industry outlook for Asian banking systems, says Moody's

June 26, 2009:

At the same time, Indian banks are free of any toxic assets and have generally weathered the international financial crisis relatively unscathed. They enjoy good funding and liquidity profiles, although earnings quality still needs improvement.

For Asia's banks as a whole, when looking at their prospects, the Moody's report sees challenges in light of the severe and protracted nature of the current global recession.

Indeed, the widespread presence of negative industry outlooks across the banking systems covered by Moody's in the region reflects our basically cautious stance over the next 12 months.

Moreover, while mildly positive macro-economic indicators and signs of a stock market rebound have recently emerged, the unprecedented nature of the financial crisis raises questions over the certainty of a swift recovery.

Another significant uncertainty is whether the recent surge in wealth across Asia can generate sufficient levels of consumption to compensate for the lower demand from the US and other developed economies, traditionally the significant buyers of Asia's goods.

But it is also important to note the significant steps taken since the Asian financial crisis and the fact that standards for accounting, transparency, governance, risk management and regulation have all improved markedly throughout the region.

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(This is press release of Moody's Investors Service)



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