... have turned more challenging for Malaysian banks. Key issues include weak commodity prices amid softer global growth; significant currency weakness; and retreating liquidity flows. Banks' balance sheets are reasonably healthy, and we believe the risk of a full-blown banking crisis remains low. However, financial profiles are likely to deteriorate as these negative developments persist. Asset-Quality Pressures Anticipated: Fitch Ratings sees rising asset-quality risks amid a more uncertain economy. Deterioration has been mainly in offshore exposure to date, while domestic asset quality remains benign. Reasonably healthy overall corporate balance sheets suggest some resilience, but credit migration at the margin is likely to raise impairments. Commodities Weakness Slows Growth: Banks' direct exposure to the commodity sector is small (4% of domestic loans at end-September 2015), and we believe ancillary commodity- related exposures to be...
