Moody's sees negative outlook for some Asia banking systems

HONG KONG: Moody's Investors Service has changed the industry outlook for banks in Australia, Hong Kong, Taiwan, the Philippines, Mongolia and Cambodia to negative from stable, based on the rating agency's revised scenarios for global macroeconomic trends.

Furthermore, it said the industry outlooks on most banking systems in Asia-Pacific had turned negative.

"While the direct impact of the current global financial crisis on banks in Asia-Pacific has been comparatively limited, these changes in the industry outlook reflect expectations that gathering economic headwinds from a global recession will increasingly test the resilience and strength of regional banking industries," said Jerry Chien, managing director for Moody's Financial Institutions Group in Asia Pacific.

He was speaking on the release of a new Moody's report, Asian Banking System Outlook: An Update , which was authored by senior banking analysts in the region. Specifically, the report looks at the banking systems in Australia, Hong Kong, Taiwan, the Philippines, Mongolia and Cambodia.

"In terms of the macroeconomic outlook, Moody's central scenario for 2009-2010 has shifted to one of ‘global healing,' and in which the process of global deleveraging and tight financial conditions depress emerging markets to below-trend growth and lead to economic stagnation," Chien said.

"There is also a downside risk that this scenario could shift to a more negative outcome of 'disintegration', which would entail a collapse in global trade, commodity prices and international financial flows."