Connect with us

Banking

APAC Banks to Face Portfolio Valuation Losses As Yields Rise

The latest data suggest that Fitch-rated banks in Hong Kong, India, Indonesia, Malaysia and Taiwan have the largest AFS securities portfolios, and display particular sensitivity to changes in yields.

Published

on

Fitch Ratings-Hong Kong/Singapore-21 March 2021: A rise in yields for long-dated sovereign bonds will result in near-term losses for Asia-Pacific (APAC) banks as they recognise valuation changes on their available-for-sale (AFS) bond portfolios, but the capital impact should be manageable for most rated banks, says Fitch Ratings.

Correlation between banks’ valuations of AFS securities and changes in domestic yields has historically been strong in some APAC markets, as gains and losses are marked to market in the quarter they occur.

The latest data suggest that Fitch-rated banks in Hong Kong, India, Indonesia, Malaysia and Taiwan have the largest AFS securities portfolios, and display particular sensitivity to changes in yields.

In Indonesia and Malaysia, for example, AFS revaluation losses were equivalent to 10%-15% of operating income when yields rose by 50bp or more, resulting in a correlation coefficient of nearly -90% during 2012-2016.

Related Fitch Ratings Content: Impact of Rising Yields on APAC Banks

Read More

Banking

Fitch Affirms Thailand’s rating at ‘BBB+’ with a Stable Outlook

Fitch forecasts Thailand’s tourism-dependent economy will recover only modestly, by 1.8% in 2021 after a sharp 6.1% contraction in 2020.

Published

on

Don Mueang Bangkok domestic airport
Empty seats tagged with social distancing await passengers in Don Mueang Bangkok domestic airport

Fitch Ratings has affirmed Thailand’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB+’ with a Stable Outlook.

(more…)
Continue Reading

Economics

China’s new three-child policy highlights risks of aging across emerging Asia

Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.

Published

on

Street vendor in Bangkok

Population aging in China (A1 stable) and other emerging markets in Asia will hurt economic growth, competitiveness and fiscal revenue, unless productivity gains accelerate, according to a new report by Moody’s Investors Service.

(more…)
Continue Reading
Wise

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 14,105 other subscribers

Recent