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Singapore Banks' Emerging-Market Expansion Will Increase Risk

Singapore's three major banks' expansion into more volatile emerging markets will weaken their risk profiles, posing challenges to asset quality and increasing operational complexity. Deterioration in the operating environment or excessive risk-taking in these markets could increase the likelihood of negative rating action, unless compensated by enhanced loss-absorption buffers.


3Q19 Bank Regulatory Webinar

02 October 2019 at 15:30 BST / 10:30 EDT

Please join Fitch Ratings for our quarterly update on global bank regulation and the most recent quarterly results reported by the largest European institutions. Our distinguished guests will be:

  • Monsur Hussain, Head of Financial Institutions Research - Regulatory Policy
  • Alan Adkins, Head of Financial Institutions Central Functions and Research Group
  • Christian Scarafia, Co-Head of Western European Banks

Register Now


Asia-Pacific Banks’ Rising Exposure to Property Risks

Following our recent publication of the Asia-Pacific Banks: Rising Exposure to Property Risks report, Fitch ratings is pleased to invite you to a webinar to discuss the key themes in this report.

Date: 09/26/2019
Time: 14:00 HKT

Register Now

New Zealand Regional Banks' Well Positioned for a Downturn

Fitch's base case is for a stable operating environment, although downside risk from external events continues to increase. A downturn is likely to be felt through slower loan growth and a rise in impaired assets, particularly if unemployment increases significantly.

Sufficient Buffers at Hong Kong Banks to Withstand Near-term Challenges

Fitch Ratings says its recent downgrade of Hong Kong's Long-term Foreign-Currency Issuer Default Rating to 'AA'/Negative' from 'AA+'/Stable does not have an immediate impact on its assessment of Hong Kong's banking system. 

U.S. Treasury Takes the Long Road on GSE Reform

The U.S. Treasury's recently issued plan to reform housing Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac is likely to take meaningful time to come to fruition

Jinzhou Coupon Skip Underlines Varying Support for Chinese Banks

Our support-driven ratings of Chinese banks reflect our view that the state's propensity to provide extraordinary support to different tiers of banks will vary under a stress scenario.

Introducing our ESG Heat Map

Fitch Ratings has launched an ESG Heat Map covering 29 different sub-sectors for Financial Institutions to provide further insight into the relevance of ESG factors to credit ratings. The map is designed to help users understand how relevant individual ESG topics are to credit ratings across different sectors.

Kenya Lending Rate Cap Weighs on Bank Earnings and Loan Growth

Kenyan banks' earnings and loan growth will stay subdued while the country's lending rate cap remains in place. Restricting the interest charged on lending has helped some borrowers and limited the profit that banks can make from them, but it has also had unintended side-effects.

China Slowdown Would Hit Banks in Asian Developed Markets Most

Banks in Asia's trade-dependent developed markets would face the most pressure on their credit profiles in the event of a sharp slowdown in the Chinese economy.
RelatedChina Slowdown Would Hit Banks in Asian Developed Markets Most

European Banks Face Weaker Revenue Outlook

The European banking sector's revenue outlook has weakened since the start of 2019, with accommodative monetary policy likely to continue squeezing banks' margins. Banks' revenue could face extra pressure as a result of the uncertain operating environment, notably from risks linked to Brexit, eurozone politics and the US-China trade war. 

Singapore's New Digital Banks No Big Threat to Largest Banks

The Monetary Authority of Singapore (MAS) is accepting applications for new digital bank licences up until the end of 2019, and it will announce in mid-2020 up to two digital full bank licences that allow access to retail deposits and up to three digital wholesale bank licences catering to SMEs and other non-retail segments.

Volcker 2.0 Eases Bank Compliance, May Free Up Market-Making

The approval by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) of the newly updated Volcker rule will ease compliance with the requirements that prevent banks from engaging in proprietary trading, and, in doing so, would enhance their role as market makers and aid market liquidity. 

China POEs' Debt-for-Equity Swaps Face Significant Bank Hurdles

The National Development and Reform Commission (NDRC) aims to reduce POEs' credit risks and rejuvenate the private sector by encouraging more POEs to pursue market-oriented debt-for-equity swaps with financial institutions, according to the commission's working guidelines for corporates to reduce leverage released 29 July 2019.

Structural Challenges Pressure Japanese Major Banks' Profitability

Evidence of banks increasing their risk appetite to improve profitability include higher exposure overseas and shifting into more complex structured notes from government bond holdings, although the extent varies among the banks.


Related Report:
Presentation: Japan's Major Banks

Leveraged Loan, CLO Exposures Understate Risks for Financial Institutions

Financial institutions' leveraged loan and CLO exposures are manageable relative to sector capital but risks may rise sharply in a stress. Undrawn facilities may be called on leading up to or during a leveraged loan downturn. Banks extend a mixture of credit facilities to CLO managers, investment funds and other non-bank commercial lenders, which are collateralised by leveraged loans or CLOs. 

Prolonged Trade Tensions Elevate US Agriculture Risks

China's recently announced embargo on US agricultural imports escalates trade-related risks to the US farm sector, which is experiencing falling sales, prices and land values from previous tariffs. Effects of this downturn are felt in state revenues, agricultural loan performance and corporate earnings.

EU Banks Narrow Gap in Money Laundering Regulation vs. US

Recent proposals from EU and US bank regulators highlight the disparity of approaches in assessing anti-money laundering and counter-terrorist financing risks, as EU regulators raise overall standards and scrutiny of controls, while US agencies highlight existing well-established regulations without issuing new requirements. 


Consumer Lending in Vietnam - Does Rising Leverage Add Risks in the Financial System?

Please join Fitch Ratings for our update on Consumer Lending in Vietnam. During the presentation, we touched upon these discussion points:

  • Consumer lending landscape in Vietnam
  • High household leverage and household debt-servicing capability
  • Are the mitigating factors strong enough to cushion the risk?
  • Fitch's view on the rating implications


Listen Now


Related Reports:
Vietnam Bank Sector More Vulnerable to Shocks as Leverage Rises
Consumer Lending in Vietnam

Rapid Growth Overseas May Put Pressure on Korean Banks' Profiles

South Korea's major commercial banks are likely to be slightly more aggressive in expanding overseas than we previously expected, in line with their parent holding companies' ambitious medium-term growth targets.


Related Reports on Korean Banks:

No Immediate Impact to Capital One's Ratings From Data Security Incident

The announced data breach at Capital One Financial Corp (COF), while credit negative in nature, does not have an immediate impact on its ratings, according to Fitch Ratings. Fitch currently rates COF 'A-'/'F1'/Stable Outlook.

Proactive Deposit Rate Cuts by Online Banks Support NIMs

Online banks have been proactively lowering rates paid on certificates of deposit and savings accounts in advance of expected Federal Reserve rate cuts, which should help offset downward pressure on loan yields and resulting net interest margins (NIMs). Online banks, offering deposit rates generally above 2%, should experience less NIM pressure (all else equal) than retail banks that did not hike savings rates meaningfully during the Fed's tightening cycle.

Taiwan Bank Holding Companies' Rising Leverage Pressures Ratings

BHCs' ratings are sensitive to their standalone leverage and financial flexibility, which we see as susceptible to event risks, such as large-scale non-common-equity funded acquisitions or - in the case of Taishin Financial Holding Co., Ltd. (BBB/Negative) - the ultimate resolution of pending litigation.

Singapore Banks' US-Dollar Funding Stronger, but Untested

Fitch Ratings believes Singapore's three major banks have managed their US-dollar funding and liquidity risks generally well, aided by more diversified US-dollar funding sources. However, the underlying strength of their US-dollar funding remains untested under a stress scenario characterised by a severe deterioration in liquidity conditions. 

Global Bank Rating Outlooks Are Now More Skewed to the Negative

Bank rating Outlooks have become more skewed to the negative this year, with the global share of Negative Outlooks rising to 17% at end-1H19 from 13% at end-2018. The share of Positive Outlooks was 6%, down slightly over the period.

Rising Household Debt May Weigh on Medium-Term Chinese Growth

Chinese household debt has continued to rise rapidly, reaching 85% of disposable income at end-2018. Rising debt servicing costs do not pose near-term risks to financial stability, but will weigh on economic growth in the medium term and this is reflected in our latest GDP forecasts. 

rating action

Fitch Revises ANZ's Outlook to Negative; Affirms Ratings at 'AA-'

The revision of the rating Outlook to Negative reflects the risk that ANZ's focus on remediating operational and compliance risk issues and culture may result in the diversion of resources from ongoing operations, which could ultimately lead to a weakening of ANZ's earnings relative to peers. 

Is Libra a Challenge to Bank Payment Mechanisms?

Facebook's Libra digital currency is a significant effort by a developed-market big-tech firm to set up an alternative retail payment mechanism, and aims to emulate the success of similar initiatives in emerging markets.

Special Report

Turkish Banks Avoid Liquidity Crunch; Refinancing Risks Persist

Turkey's banking system has avoided a foreign-currency (FC) liquidity crunch since the lira depreciation in August 2018, helped by FC deposit inflows, but refinancing risks remain high.

Deutsche Bank's Rating Will Depend on Execution of Restructuring

Cutting back volatile, capital-intensive and underperforming sales and trading activities, and further reducing the cost base should improve profitability and strengthen leverage, but execution risks are high. The Outlook is Evolving, indicating that the rating could move in either direction over a one-to-two-year horizon.

Libra the Latest Challenge to Bank Payment Mechanisms

We expect limited short- to medium-term impact on North American and European banks, although cross-border payment specialists such as Western Union, Moneygram and Transferwise could be affected. Facebook's extensive network, big data access and technology could eventually help Libra challenge banks' dominance of payment mechanisms. 

Webinar On Demand

2Q19 Bank Regulatory Webinar

Please join Fitch Ratings for our quarterly webinar on global bank regulation. During the presentation, we touched upon these topical themes:

  •  Update on resolution, including implications for creditors in home vs host jurisdictions
  • Implications of open / virtual banking for banks’ deposit

Listen Now


Credit Quality at Unsustainably Good Levels in the US

Christopher Wolfe of Fitch Ratings weighs in on the U.S. banking sector on CNBC. He says the credit quality for most of American banks is good, but can't persist indefinitely. Also listen to Christopher Wolfe, joined by Bryan Curtis and Rishaad Salamat on the topic of Banks Becoming More Comfortable With DFAST Process on Bloomberg Radio's Daybreak Asia.

Vietnam Bank Sector More Vulnerable to Shocks as Leverage Rises

Credit leverage in Vietnam's banking system has risen in recent years, with bank credit increasing to an estimated 134% of GDP by end-2018, significantly higher than the 'BB' median of 60% and 'BBB' median of 55%. This has been primarily driven by the consumer sector, which has benefitted from Vietnam's sustained strong economic growth and increasing affluence.


Kevin Duignan


Kevin Duignan

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Jose Santos


Jose Santos

Business Group Head

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Erwin van Lümich


Erwin van Lümich


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Jonathan Cornish


Jonathan Cornish


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Sing Chan Ng


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James Longsdon


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Alejandro Garcia


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Diego Alcazar


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Christopher Wolfe


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John Bareiss


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