Covid-19 and it’s impact on ASEAN Bank ratings

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The impact of the coronavirus pandemic has certainly hit the Asean banks and induced a recession that is now currently affecting majority of the countries in the region.

According to Fitch Ratings, They will be downgrading the Issuer Default Ratings (IDRs) of around 20% of ASEAN banks portfolio beginning March.

ASEAN banks portfolio ratings in this period are at around 80%, with 41% incurred a downward outlook. We currently have around 30% on negative outlook .

Among a couple of factors that drives these rating and outlook changes are ratings assessed that has been driven by institutional support from foreign parents – especially in Indonesia. Recent re-assessment has conducted to several countries like the Philippines, Thailand and Vietnam pointed to a sovereign rating outlooks to Positive from Stable.

Changes in Bank’s Viability Ratings (VRs) has also made changes due to the VR been driven by weakening operating environments and also deterioration in the banks’ financial profiles. Fitch have downgraded the operating environment for all Fitch-rated ASEAN banking markets – except Singapore (negative outlook).

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