China, Taiwan, Hong Kong, Thailand banks face weaker 2026 outlook

Japan is the only banking market in APAC to hold an "improving outlook," according to Fitch Ratings.

Four banking systems in the Asia Pacific region hold a deteriorating outlook, whilst most are neutral, according to the latest report by Fitch Ratings.

China, Taiwan, Hong Kong, and Thailand all have a “deteriorating” outlook for 2026, whilst Japan is the only APAC market with an “improving” outlook, the ratings agency said in a November 2025 report.

Loan growth and revenue expansion are said to be “comparatively stronger” in India, Indonesia, and Vietnam on the back of their favourable demographics and policy priorities.

“Net interest margins are close to cyclical peaks, and the interest-rate trajectory in most banking systems is likely to exert modest pressure on profitability, although we see some upside for Japan,” Fitch Ratings said.

Most ratings outlooks are stable thanks to their capital buffers, pre-impairment profitability and, in many cases, rating headroom, Fitch said.

However, negative rating pressure could emerge if asset quality weakened or earnings erode more than expected; or if the credit profiles of the markets deteriorate.