Photo courtesy of Jungwoo Hong via Unsplash.

Economic growth to cushion rising risks faced by ASEAN banks

Tightening of interest rate cycles in 2023 will weaken asset quality, says Fitch.

The expected robust economic growth in ASEAN markets should mitigate risks to their banking sectors, according to a report by Fitch Ratings.

The tightening of the regional interest rate cycle through 2023 is expected to weaken asset quality across most ASEAN banking systems, the ratings agency said. Rates are likely to rise further this year in all six key ASEAN banking markets, aggravating the impact. 

For most, economic growth is also set to slow as external headwinds mount, with only Thailand seeing faster expansion.

ALSO READ: Real-time cross border payments edges closer to reality with ISO 20022

“However, risks to bank credit profiles in 2023 should be mitigated by robust economic growth, adequate provisioning and the higher rates lifting net interest margins in most markets,” the report added.

However, compared to Europe and the US, inflationary pressure in Indonesia, Malaysia, Thailand and Vietnam have been noted to be more muted. This reduces the need for dramatic monetary policy tightening, according to Fitch.

“Coupled with continued robust domestic demand growth prospects and resilient job markets, [this] should help limit asset-quality pressure,” the ratings agency added

Follow the links for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!


Bank DBS Indonesia avails fast, reliable and sustainable corporate banking
Its ESG-based bank financing, as reflected in sales and asset under management, proves to be an IDR1.8t (US$117m) success.
Italy brings its strong suits to Singapore’s fintech expo
Italian trade executive says 9 firms at the Singapore Fintech Festival 2023 exemplify the diverse range of products and expertise Italy can bring to the table.
Digibank by DBS sets new digital banking standards
Apart from speed and convenience, DBS stays ahead with exceptional personalisation, open banking, and enhanced security.