Asia-Pacific Financial Institutions Monitor 4Q 2021: Evergrande, Southeast Asia Risks, And The Digital Dilemma

A shaky Chinese property sector and lower growth forecasts in Southeast Asia loom as threats to a stabilizing prognosis for Asia-Pacific banks. Our net rating outlook bias for Asia-Pacific financial institutions is clawing its way out of deeply negative territory toward neutral ground. As of Aug. 31, 2021, the net outlook bias had improved to about -1%: this is up from -6% as of May 31, 2021; and -18% as of Oct. 31, 2020, during the depths of COVID-19. The stabilizing trend, however, belies the potential for downside risks to intensify and in turn affect ratings. The past quarter was tough for banks in some jurisdictions. Notably, the spillover effects from property sector risks in China are heightened as the

...- Asia-Pacific banks are stabilizing, but downside risks lurk in some jurisdictions. - The China property sector is under pressure, and growth forecasts are lower across Southeast Asia. These risks are problematic for banks. - Emerging trends--including digitalization technologies and an increasingly strong investor focus on ESG risks--could have profound effects on Asia-Pacific banks. A shaky Chinese property sector and lower growth forecasts in Southeast Asia loom as threats to a stabilizing prognosis for Asia-Pacific banks. Our net rating outlook bias for Asia-Pacific financial institutions is clawing its way out of deeply negative territory toward neutral ground. As of Aug. 31, 2021, the net outlook bias had improved to about -1%: this is up from -6% as of May 31, 2021; and -18% as of Oct. 31, 2020, during the depths of COVID-19. The stabilizing trend, however, belies the potential for downside risks to intensify and in turn affect ratings. The past quarter was tough for banks in some...

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