APAC banks keep strong footing as equity prices hit record highs

Optimism persists despite several risks to credit conditions remaining elevated, said S&P.

Most banks in Asia Pacific can absorb risks associated with US trade and other political volatility, geopolitics, and financing conditions, said S&P Global Ratings.

More than 80% of bank ratings in the region remain on stable outlook, the ratings agency said, referring to its Q3 2025 Monitor report.

"Market sentiment remains buoyant, with equity prices in many jurisdictions at or near historic highs and bond spreads close to historic lows. This optimism persists despite the fact that several risks to credit conditions remain elevated," said S&P Global Ratings credit analyst Gavin Gunning.

A negative step-change to the macro environment outside S&P’s base case, however, can erode banks’ asset quality and test their outlooks— especially if households, corporates, and public sector entities are hurt in such a scenario.

"Such a downside could be driven by U.S. trade or other policy volatility outside our base case. Further, a worsening of geopolitical factors could have a profound negative impact on bank ratings, as has occurred in some past crises," Gunning said.