Public Administration News
Share
 |
S&P Says Inflation, Rising Interest Rates Present Challenges for Banks in Asia-Pacific |
| Source: |
malaya.com.ph |
| Source Date: |
Monday, April 04, 2011 |
| Focus: |
Electronic and Mobile Government, Citizen Engagement, Internet Governance
|
| Created: |
Apr 12, 2011 |
|
Spurred by continuing economic growth, inflationary pressures are building across the Asia-Pacific region, Standard & Poor’s Ratings Services (S&P) said in a report published recently.
S&P said inflation could have a negative impact on the credit standing of banks, as it could hamper macroeconomic growth and potentially weaken the financial conditions of borrowers.
Policymakers in the People’s Republic of China, the Republic of India, the Republic of Korea, and most ASEAN countries have started to raise policy rates in an effort to cope with inflation.
As a pre-emptive move, the policymaking body of the Bangko Sentral ng Pilipinas, the Monetary Board, two weeks ago raised its key rates by 25 basis points on rising inflation.
Although the pace of interest rate hikes has been mild, a sharp rise in interest rates could hit borrowers with high debt levels hard and result in a surge of loan delinquencies," S&P said.
The credit-rating agency added that the potential risk appears to be more pronounced in countries with a combination of rapid credit growth, rising property prices, and high levels of private-sector debt.
On the other hand, S&P said most banks in the Asia-Pacific region have maintained sound financial conditions and their net nonperforming loans (NPLs) are at moderate levels.
"S&P believes that rated banks in Asia-Pacific are able to withstand the current inflationary pressure, and it does not anticipate conducting any negative rating actions at present," the credit-rating agency said.
That said, S&P said economic conditions in Asia-Pacific are exposed to volatile commodity prices and the still fragile global economy, due to the region’s net demand for commodities as well as its net exports.
"We will pay close attention to inflationary trends, the effectiveness of policy measures, and any subsequent impact on the quality of banks’ assets," S&P said.
S&P said that the report, titled "Inflation And Rising Interest Rates Present Challenges For Banks In Asia-Pacific," aims to examine the factors arising from inflation and its impact on the credit standing of banks in the region.
S&P, a part of The McGraw-Hill Companies, is the world’s foremost provider of credit ratings.
With offices in 23 countries, S&P is an important part of the world’s financial infrastructure and has played a leading role for 150 years in providing investors with information and independent benchmarks for their investment and financial decisions. (By Jimmy Calapati)
|
|
|
|
|
|
 Tag This |
S&P Says Inflation, Rising Interest Rates Present Challenges for Banks in Asia-Pacific Spurred by continuing economic growth inflationary pressures are building across the Asia-Pacific region Standard Poor’s Ratings Services S&P; said in a report published recently
 Tell A Friend |
|
 del.icio.us digg this Slashdot |
| Rate: |
0 ratings
|
Views: |
178 |
| Comments: |
0 |
Favorited: |
0 |
Bookmarked: |
0 |
Tagged: |
0 |
|
|
|
|