Fitch may upgrade Malaysian, Thai, RI bank ratings
Fitch may upgrade Malaysian, Thai, RI bank ratings
Stephanie Phang and Kate Mayberry, Bloomberg, Singapore
Banks in Malaysia, Thailand and Indonesia may have their ratings raised by Fitch Ratings Ltd. as the region's financial systems recover from the Asian financial crisis and stronger economies lift country ratings.
"Most Asian banking systems are still in an upswing from the crisis of the late 1990s, with sovereign rating upgrades lifting the ceiling and allowing bank ratings to rise," Fitch said in a statement today, citing David Marshall, its head of Asian financial institutions.
Fitch and larger rivals Standard & Poor's and Moody's Investors Service have become more optimistic about the Asian banking industry's prospects as expanding economies fuel demand for loans, boosting profit. Mergers, asset clean-ups and more prudent loan management have also strengthened banking systems in the region since the crisis.
"The improvement in the Asian economies has helped boost growth in loans as well as lowering provisions in Malaysia and Indonesia," said Stephanie Lee, who helps manage assets worth about US$10 billion in Asia at Aberdeen Asset Management in Singapore. "The entire banking industry in Asia should re-rate." The banks that Lee owns include Public Bank Bhd., Malaysia's No.4 lender, and Indonesia's PT Bank NISP.
A devaluation of the Thai baht in 1997 caused currencies across Southeast Asia to tumble, leaving many borrowers unable to repay their debts and banks laden with bad loans. The resulting financial crisis crimped economic growth across the region.
This year, economic growth in Asia, excluding Japan and the Indian subcontinent, is expected to accelerate to 7.1 percent, the fastest since the 1997 crisis, the World Bank said earlier this month. In April, the Washington-based organization predicted growth of 6.3 percent.
On Nov. 9, Fitch raised the credit rating of Malayan Banking Bhd., Malaysia's largest lender by assets, one level to A-, a day after it lifted the country's sovereign rating.
In October, the ratings company raised to positive the outlook for eight Indonesian banks, including PT Bank Mandiri, PT Bank Rakyat Indonesia and PT Bank Negara Indonesia.
Standard & Poor's raised its ratings on Bangkok Bank Pcl, Thailand's biggest lender, and three of its rivals on June 24, citing faster economic growth, increased lending and a decline in bad assets.
It was the first time S&P had done so since the 1997 crisis. Moody's lifted its ratings on Thai Military Bank Pcl on Sept. 1 after a merger with the local unit of Singapore's biggest bank and Industrial Finance Corp. made it Thailand's No. 5 lender.
"The banks' recovery cycle is completed, they should go back to their pre-crisis ratings," said Kelvin Miranda, who helps manage about $180 million at Asian Asset Management Sdn. in Kuala Lumpur.
A high level of bad debts is hurting the outlook for Philippine banks, Fitch said.
"The Philippines stands in contrast to the positive trend with concerns at the sovereign level over the fiscal policy outlook and banks facing some negative rating pressures as they grapple with heavy non-performing loans," Fitch cited Marshall as saying.