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Moody's: Malaysian banks' outlook stable
by Cals Tue 15 Dec 2015, 05:13
Moody's: Malaysian banks' outlook stable
By Tan Siew Mung / theedgemarkets.com | December 14, 2015 : 12:58 PM MYTKUALA LUMPUR (Dec 14): [size=16]Moody's Investors Service said most Asia-Pacific banks, including those in Malaysia, had a stable outlook due to their loss-absorbing buffers.
In a report today, Moody's Financial Institutions Group managing director for Asia Pacific Stephen Long said regional banks had a stable outlook despite asset quality concerns.
"Profitability will likely weaken but remain sufficiently strong, so that rising impairment expenses can be absorbed without resulting in weaker capitalisation.
"A moderation in loan growth will also be supportive of relatively stable capital ratios. Another important buffer for Asian banks, beyond their profitability and capitalisation, is relatively strong loan loss reserves," Long said.
High household debt is a concern for banks in Malaysia, according to Long.
But he also noted that household debt growth had slowed due to regulatory measures.
"Bank ratings will remain broadly stable because of good capital levels, as well as strong funding and liquidity profiles, as most systems are deposit funded, but the risk for ratings are skewed to the downside in the event of an economic slowdown in the region that is sharper than expected," Long said.
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