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ASEAN banks weather pandemic storm but bad loans may rise
Coronavirus lockdowns will slow the pace of economic recovery in the 10 ASEAN countries according to Moody’s Investors Service. The world’s biggest credit ratings company says that may harm the ability of borrowers to repay their debts, putting strain on the banking industry.
“Banks in Thailand, the Philippines and Indonesia are particularly vulnerable as their economies struggle with elevated numbers of virus cases, spiking uncertainties regarding their economies reopening. Yet, policy support for borrowers and the concentration of the impact on a few economic segments will limit the deterioration in banks’ overall asset quality,” said Senior Analyst Rebecca Tan.
Moody’s rates Thai banks Baa1 Stable and those in the Philippines and Indonesia Baa2 Stable. Any rating above or including Baa3 is considered investment grade.
Indonesia has been hit hardest by Covid-19 among ASEAN members. Nearly 3.7 million people have been infected and 109,000 deaths registered. In the Philippines 1.7 million people have been infected with more than 29,000 deaths. Malaysia has 1.3 million cases and Thailand more than 776,000.
Cambodia has seen infections fall for nine straight days with cases dropping below 500 per day for the first time in seven weeks.
The Kingdom’s banks have emerged from the pandemic relatively unscathed, with loans and deposits growing in the first half of the year compared to Jan-June 2020.
Outstanding loans rose by 19 percent year-on-year to $33.9 billion as of June this year, while customers’ deposits increased by 20.8 percent to 32.7 billion, the central bank said last month.
Banks continue to deal with bad debt, while following central bank requests to ease the burden on borrowers. The National Bank of Cambodia says banking and financial institutions restructured $5.5 billion in loans for 367,239 borrowers in the first half of this year.
Source: https://www.khmertimeskh.com/50913371/asean-banks-weather-pandemic-storm-but-bad-loans-may-rise/