Southeast Asian banks likely to remain resilient: S&P

Banks in the region are expected to remain healthy despite varying risks and profitability.

A Standard & Poor's report noted that, overall, most banks in Southeast Asia have high loans growth and low to moderate credit costs, but they continue to vary considerably in profitability and risk management practices.

“Banks in emerging markets, such as Indonesia, have higher loan margins, while those in more mature markets, such as Singapore and Malaysia, face margin pressure due to competition,” said Standard & Poor's.

Also, the credit ratings firm believes the implications of the U.S. debt ceiling standoff on banks in Southeast Asia are limited.

Standard & Poor's credit analyst Ivan Tan said, "We expect the robust economic outlook in Southeast Asia, the strong domestic savings rates, and the generally healthy and corporate sectors to mitigate external pressure.”

He said most banks have adequate capitalization to support their growth through retained earnings.