KUALA LUMPUR: Fitch Ratings had downgraded 20 per cent of Asean banks’ issuer default ratings (IDRs) under its portfolio since March.
This follows substantial increasing risks among the financial institutions amid the coronavirus-induced recession.
“We affirmed around 80 per cent of our Asean banks portfolio ratings in this period: 41 per cent of these incurred a downward outlook revision, either reassessed to negative from stable or to stable from positive.
“We now have around 30 per cent on negative outlook or rating watch negative,” the ratings agency said in a statement.
Fitch said nearly two thirds of the ratings assessed had been driven by institutional support from foreign parents – especially in Indonesia – or the relevant sovereign rather than the intrinsic credit profile.
“We have rating action that has followed action on the sovereign, for example recently when we reassessed the Philippines, Thailand and Vietnam sovereign rating outlooks to Positive from Stable and Malaysia to Negative from Stable,” it added.
There have also been changes to the banks’ viability ratings (VRs), which in turn have driven the IDRs if they are not support driven.
Fitch said the VRs had been driven by weakening operating environments and also deterioration in the banks’ financial profiles, in particular asset quality and earnings and profitability.
The firm downgraded the operating environment for all its rated Asean banking markets except Singapore, which remains on negative outlook.