Chart of the Week: Asia Pacific banks' problem loan ratios stabilising

Asset quality risks are receding in most markets.

According to Moody's Investors Service, macroeconomic conditions have stabilised in most APAC countries and improved in some parts of the region, easing asset quality risks.

The data in the chart are for Moody’s-rated banks. They are for the end of financial year 2016 for all countries, except for Japan, for which data are for the first half of financial year 2016. NPL ratio projections are forecasts based on our econometric model, which incorporates real GDP growth, unemployment, inflation and foreign-exchange rates.

The forecasts do not necessarily capture all factors, such as write-offs, sales and regulatory forbearance. Projected NPL ratios are for end-2018 for all countries except for Australia, China, Hong Kong, India, Japan, New Zealand, the Philippines, Sri Lanka, Taiwan, and Vietnam, for which projections are for end-2017.