Asian banks to be hit by triple trouble in 2016

Slowing economy, correcting property markets, and highly indebted households.

BMI Research holds a negative outlook for Asian banks in 2016, as headwinds continue to mount amid a slowing regional economic growth outlook, a correction in the region's property markets and highly indebted households. 

Indeed, 2016 will be a year fraught with risks for Asian banks as the Chinese economic slowdown deepens while developed economies in the EU, along with Japan, are set for continued mediocre economic growth, the analyst adds. While high corporate debt levels are a concern for Chinese banks, banks in a number of countries in the region, such as Australia and Thailand, face headwinds from elevated levels of household indebtedness.

"Other than Australia's falling property prices, some of the region's other property markets, notably in Singapore and Hong Kong, are also undergoing a correction, and we believe that this will weigh on the lending prospects of banks in the two city states. Vietnam's banking sector will buck the regional trend, and continue to improve over the coming years as ongoing financial reform efforts by the government will gain traction."