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The outlook for the majority of Asia-Pacific financial institutions remains relatively stable despite slowing economic growth that is weighing on trade conditions across the region, according to the latest "Asia-Pacific Financial Institutions Monitor 2Q 2019: Ratings Outlook Relatively Stable Despite Slower Growth," a report published today by S&P Global Ratings.
Cooling demand in the region's major economies has been the primary cause of weaker trade. Partially offsetting the softer growth outlook, financing conditions eased slightly in the first quarter, mainly in response to the Federal Reserve Bank's decision to slow interest rate hikes and China's loosening of lending.
"This confluence of factors has not had a meaningful impact on our outlook for the credit quality of Asia-Pacific financial institutions for 2019," said Gavin Gunning, an S&P Global Ratings credit analyst and author of the report.
"We believe the cyclical downturn in trade, and slightly more negative outlook for the corporate sector, remains generally manageable, at current rating levels, for the majority of the region's financial institutions," he added.
In addition, expectations still continue that most banks can weather a moderate and less-abrupt downside scenario outside the base case at current rating levels, but that a significant and abrupt credit cycle downturn will likely result in negative ratings momentum for some Asia-Pacific financial institutions, the report added.
