...Loan Losses Set to Rise as Growth Cools Slowing credit growth and tight loan monitoring are most relevant for Asia-Pacific banks as the credit cycle turns. More restrictive lending is unlikely to lead to deleveraging ¡ bar a major economic contraction ¡ but a stabilisation would be a positive development. Spill-overs from China's economic stimulus have supported cross-border lending, much of it trade-related. Meanwhile, south Asian countries ¡ including Thailand, Malaysia and Singapore ¡ have seen rapid expansion in household credit, as is illustrated in our second chart. The third chart shows APAC's changing credit stock. Chinese banks, operating in a favourable growth environment, have clearly overtaken Japanese banks as the region's dominant lenders. EM Asia's (ex-China) rise is also highlighted helped by strong growth and a rising middle class. What to Watch Targeting Indebtedness: Fitch Ratings believes that controlling the pace of growth and the potential bubbles (often property)...
