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Non-Bank Financial Institutions

Global Home > Non-Bank Financial Institutions

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.

Webinar on Demand

European Leasing & Rental: Business Models and Key Credit Trends

European leasing and rental companies have become more prominent participants on both public and private debt markets. Business models, risk profiles and exposure to economic cycles differ widely between issuers. Topics include business models and key credit trends for:

  • Rolling stock lessors
  • Equipment rental companies
  • Fleet/car leasing companies

Speakers:
Mark Young - Managing Director, Head of EMEA and APAC NBFI
Christian Kuendig - Senior Director, Head of EMEA NBFI
Aslan Tavitov - Senior Director, NBFI David Pierce, Director, NBFI

Listen Now

Fitch Publishes Dubai Aerospace Enterprise's 'BBB-' Rating; Outlook Stable

Fitch Ratings has published Dubai Aerospace Enterprise (DAE) Ltd's Long-Term Issuer Default Rating (IDR) of'BBB-' with Stable Outlook, DAE Funding LLC's senior unsecured long-term rating of 'BBB-' and DAE's senior secured long-termerm rating of 'BBB'.

Credit Card Asset Quality Weaker in First Quarter

Credit performance amongst the largest U.S. credit card issuers weakened in first-quarter 2019 (1Q19), but remains below historical averages. Both net charge-offs (NCOs) and 30+ day delinquencies for general purpose credit card issuers rose eight basis points (bps) year over year, according to latest credit card asset quality report. 
 

Dewan Demise Highlights Funding Risk at Indian Non-Bank Lenders

Dewan Housing Corporation's liquidity problems and its reported failure this week to pay coupons highlight the funding challenges faced by India's non-bank finance sector. The liquidity pressures are in stark contrast to the banking sector, which has not faced significant liquidity pressure or deposit withdrawals, despite asset-quality and capital weaknesses.
 

2019 Global Banking Conference NY - Fireside Chat - Regulatory View of Financial Stability

Kevin Duignan, Global Head of Financial Institutions, joins Michael S. Piwowar of Milken Institute and Richard Berner of NYU Stern School of Business at Fitch’s Global Banking Conference in New York, for a fireside chat on the banking regulatory environment.

Fulcrum Fees Not a Panacea for Active US Investment Managers

A broader adoption of incentive-based or "fulcrum" fee structures for investment funds could be a credit negative for traditional investment managers. Incentive-based fee structures under which the investment manager's base fee rate is a function of the fund's absolute or relative performance could help stem asset outflows, at least temporarily. 

Global Shadow Banking Growth Increases Systemic Risks

Shadow banking’s ascension may signal growing systemic risks. How shadow banks perform through the next credit cycle will determine whether this more diffuse but less transparent and more lightly regulated construct is more beneficial for the overall financial system versus the prior, more bank-concentrated model.

 

Related Materials
Special Report:
 Shadow Banking Implications for Financial Stability
Video: 2019 Risks to Watch – Shadow Banking

Financial Crime Compliance/Conduct Risk Drive High Financial ESG Scores

Financial crime compliance and conduct issues drive the highest impact Environmental, Social & Governance (ESG) relevance scores for bank credit ratings in developed markets, according to a new report that looks at specific financial institutions that have high ESG relevance scores (i.e. '4's and '5's). 

Higher BDC Leverage Increases Focus on Senior Loans, Funding

Leverage has slowly increased for business development companies (BDCs) following passage of The Small Business Credit Availability Act (SBCAA) in March 2018, which directionally Fitch views as a credit negative. However, ratings have been largely stable for the sector as BDCs utilizing higher debt capacity have opted to alter portfolio risk composition by moving the capital structure into more first-lien positions. 

Tighter Regulation Challenges Chinese Peer-to-Peer Business Models

Fitch Ratings expects China’s peer-to-peer (P2P) lending industry continues to shrink and suggests watching out the impacts on business models, asset quality, liquidity and funding.

China's Peer-to-Peer Lending Shrinks as Regulation Tightens

China's peer-to-peer lending industry will continue to shrink and consolidate as tighter regulation and weak investor sentiment drive out operators conducting the riskiest activities.

 

Related Materials:
Dashboard
Tighter Regulation Challenges Chinese Peer-to-Peer Business Models (English video)
监管趋严使中国的P2P业务模式面临挑战 (中文视频)

 U.S. Auto Loan Credit Improves; Prime and Subprime Trends Diverge

The credit performance of U.S. auto loans strengthened in 2018 with net charge-offs for the largest auto lenders declining on a year-over-year basis in 4Q18, according to the latest U.S. Auto Asset Quality Review report.

Global Non-Bank Financial ESG Risk Mostly Governance

Governance tends to have a higher relevance for emerging market NBFIs versus developed market NBFIs, where it is often associated with the implementation and/or execution of corporate strategies and structures. Developed market considerations related to governance include complex group structures, key person risk and transparency.

Webinar on Demand

ESG Relevance Scores for Financial Institutions

In this webinar, Fitch analysts from Insurance, Banks and NBFI, provided a detailed overview of our approach to ESG, our analytical framework, and the deliverables that are available to market participants. Listen Now

Potential Non-Bank Move to Bank Status Could Be Credit Positive

Bank status brings several credit benefits, including the ability to diversify funding by offering deposit accounts, access to central bank funding in a severe liquidity shortage and a stronger governance framework associated with extra regulatory oversight. However, it also brings extra compliance costs and constraints on operational flexibility that necessitate greater scale.

Boeing 737 MAX Issues Could Have Broad Aviation Effects

The Boeing 737 MAX could be a concern throughout the aviation credit sector for much of 2019, according to Fitch Ratings.
ReportGlobal Airlines, Lessors Face Mixed 737 MAX Grounding Risk

UK Rating Watch Negative Is No Immediate Threat to NBFI Ratings

The Brexit-driven Rating Watch Negative (RWN) on the UK does not imply an immediate threat to the ratings of UK Non-Bank Financial Institutions (NBFIs).  A one-notch sovereign downgrade would not, in itself, trigger issuer downgrades, and there is no automatic sovereign cap under Fitch's NBFI rating criteria. 

ESG Risk

Introducing ESG Relevance Scores for Financial Institutions

Nearly 20% of global financial institution ratings are currently influenced by governance risk according to an analysis of new Environmental, Social & Governance (ESG) Relevance Scores. ESG risks overall have a low level of direct impact on financial institution credit ratings. The scores cover over 900 banks, non-bank financial institutions and insurance companies around the globe. Download our ESG Financial Institutions special report to learn more

New Zealand Non-Bank Deposit Takers Face Scale Challenges

New Zealand's non-bank deposit takers (NBDTs) face a number of challenges as a result of their small franchises, ownership and capital structures, high macroeconomic risks and increasing investment needs.

Webinar: China Shadow Banking 2019 Outlook

NOW Available On-Demand

Fitch Ratings hosted a webcast to discuss how regulatory developments will impact the 2019 outlook for China’s shadow banking activities, and how banks will cope with growth priorities and capital preservation against more challenging economic conditions.

 

Click here to access the webinar in English

Click here to access the webinar in Chinese

 

Related Press Release:
China's Shadow Banking Sector to Shrink Further in 2019

Open-Ended Bond Funds a Potential Risk to Financial Stability

Open-ended bond funds are a potential risk to global financial stability given their rapid growth and increasing liquidity mismatches and credit risk.
Financial Times: Fitch Flags Risks of Forced Sales for Bond Mutual Funds

Private Equity Appetite for Aircraft Lessors Takes Off

Alternative investment managers (Alt-IMs) have become increasingly active investors in the aircraft leasing industry as they seek to deploy capital into a growing sector that could provide attractive investment returns. However, Fitch Ratings notes that the typically fixed-life nature of private equity ownership can increase long-term strategic and financial uncertainty.

Download ESG Relevance Scores for NBFI

For Non-Bank Financial Institutions, Fitch has assigned ESG Relevance Scores across its internationally-rated portfolio. Review all of the scores here:

ESG Relevance Scores for NBFI

CECL Ratings Neutral for U.S. Financial Institutions

The pending implementation of the U.S. accounting standard for current expected credit loss (CECL) reserves by the Financial Accounting Standards Board is not expected to result in ratings actions upon adoption, Fitch Ratings says. 

Contacts

Nathan Flanders

Global

Nathan Flanders

Analytical Global Head

+1 212 908 0827

Jose Santos

Global

Jose Santos

Business Group Head

+34 93 323 9044

Javier Serrano

GLOBAL

Javier Serrano

Business

+1 212 908 9158

Mark Young

EMEA & APAC

Mark Young

Analytical Head of NBFI

+65 6796 7229

Jonathan Lee

APAC

Jonathan Lee

Analytical

+886 2 8175 7601

Sing Chan Ng

APAC

Sing Chan Ng

Business

+65 6796 7210

Christian Kuendig

EMEA

Christian Kuendig

Analytical

+44 20 3530 1399

Erwin van Lümich

EMEA

Erwin van Lümich

Business

+34 93 323 8403

Claire Dopson

UK & Northern Europe

Claire Dopson

Business

+44 20 3530 1405

Alejandro Garcia

LATAM

Alejandro Garcia

Analytical

+1 (212) 908 9137

Diego Alcazar

LATAM

Diego Alcazar

Business

+1 (212) 908-0396

Meghan Neenan

North America

Meghan Neenan

Analytical

+1 212-908-9121

John Bareiss

North America

John Bareiss

Business

+1 312 368 3162

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