KUALA LUMPUR, Feb 12 — Moody’s Investors Service opines that the Asia Pacific’s (APAC) government measures to support economies would help mitigate the Covid-19 negative impact on banks.
The bond credit rating, in a statement today, said it expects governments and regulators will take measures such as fiscal stimulus and monetary policy easing if disruptions from the outbreak were to worsen.
Others include, the removal of some macroprudential measures, as well as forbearance or direct support to affected industries and borrowers.
Moody’s vice-president and senior credit officer Eugene Tarzimanov said a prolonged Covid-19 outbreak would hurt the asset quality and profitability of Asia Pacific banks, excluding China.
“If the outbreak intensifies and the disruptions stemming from it are not contained in the next few months, we expect negative impact on banks in Asia Pacific through various channels.
“While such effects would mostly stem from macroeconomic consequences that can take many quarters to materialise, some events, such as a decline in commodity prices, could have a rapid knock-on effect on banks,” he said.
Tarzimanov said the outbreak comes at a time when Asia-Pacific banks are already grappling with slowing economic and credit growth, as well as falling interest rates, which will weaken their profitability and asset quality.
In the event of a prolonged outbreak, he expects that the banks will be affected through channels, namely travel and tourism, private consumption, supply chains, commodities, property prices, and financial markets. — Bernama
