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Global Home > Banks

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. 

Parents' High Leverage a Drag on Korean Big Banks' Profiles

South Korean bank holding companies' rising double-leverage and appetite for leveraged acquisitions of non-bank financial companies could constrain the upside potential of their main operating banks' Viability Ratings, as the holding companies would seek more dividends from the banks.

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.

webinar

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

Date: July 31, 2019
Time: 15:00 (Hong Kong Time)

 

Please join Fitch Ratings as we discuss the key themes in the recently published report on Consumer Lending in Vietnam and update on Vietnam’s banking sector.

 

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

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

CNBC

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.

Banks in Emerging Markets Face Headwinds from Economic Slowdown

We forecast economic growth in EMs to soften to 4.5% in 2019 from 5.1%-5.2% in 2017-2018 as evidence hardens of a slowdown in China and elsewhere, including abrupt adjustments in Turkey and Argentina. But we expect EM growth to pick up to 4.8% in 2020 due to policy-easing in China and reduced pressure on EM central banks to raise interest rates, which should help borrowers.

Loan-to-Deposit Requirement Credit-Negative for Nigerian Banks

The requirement for Nigerian banks to have a loan-to-deposit ratio (LDR) of at least 60% at end-September is credit-negative for the sector, Fitch Ratings says. We believe it will push some banks to significantly increase lending to riskier borrowers, potentially with looser underwriting or underpricing of risk.

Hong Kong Banks' Profit Outlook Remains Sound Despite Retail Competition

Hong Kong's banking sector may see the loyalty of its retail customers tested as virtual banks are expected to stir up competition as early as 4Q19. However, this will not significantly dim earnings prospects for the established banks as they are well-positioned for the challenge. 

Higher Buyback Asks Soften Record CCAR Payout Credit Impact

All 18 banks passed the second round of the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) exam, with capital distribution requests up meaningfully in 2019 compared to 2018, a creditor negative.

Flatter Yield Curve Will Likely Pressure U.S. Bank Margins

U.S. banks are expected to report lower sequential net interest margins (NIM) during the second-quarter 2019 earnings season as the Treasury yield curve has notably flattened.

UK Challenger Banks More Exposed to Late-Cycle Risks, Brexit

UK challenger banks may be more vulnerable than more established banks to late-cycle and Brexit-related risks. Several challenger banks have grown faster than the market, and faster than GDP, during relatively benign credit conditions in recent years, with performance not yet tested in a downturn.

Contacts

Kevin Duignan

GLOBAL

Kevin Duignan

Analytical Group Head

+1 212 908 0630

Jose Santos

Global

Jose Santos

Business Group Head

+34 93 323 9044

Erwin van Lümich

GLOBAL

Erwin van Lümich

Business

+34 93 323 8403

Jonathan Cornish

APAC

Jonathan Cornish

Analytical

+852 2263 9901

Sing Chan Ng

APAC

Sing Chan Ng

Business

+65 6796 7210

James Longsdon

EMEA

James Longsdon

Analytical

+44 20 3530 1076

Alejandro Garcia

LATAM

Alejandro Garcia

Analytical

+1 (212) 908 9137

Diego Alcazar

LATAM

Diego Alcazar

Business

+1 212 908-0396

Christopher Wolfe

NORTH AMERICA

Christopher Wolfe

Analytical

+1 212 908 0771

John Bareiss

NORTH AMERICA

John Bareiss

Business

+1 312 368 3162

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