Geopolitics, elections to take APAC banks in a “bumpy ride” in H2

Financial institutions are overall well-buffed against risks.

Asia Pacific’ financial institutions should be able to weather economic and property risks, but geopolitical and election-related risks will take them for a bumpy ride for the rest of 2024.

Financial institutions in the region are satisfactorily managing economic and property-sector risks, said S&P Global Ratings credit analyst Gavin Gunning. 

However, market volatility has re-emerged and is expected to persist throughout the rest of the year.

“The Russia-Ukraine and Israel-Hamas conflicts amid a range of complex geopolitical risks, and a multitude of general elections before the end of the year, add to the ongoing range of economic and property sector risks that financial institutions must manage,” Gunning said.

Potential impact on banks and their credit profiles with S&P is limited, however, Gunning said.

Downside scenarios involve higher-for-longer interest rates and borrowing costs, and a worsening or property sector stress.

Overall, banks and other FIs are well buffered against these and other downside risks, according to S&P’s base case.