Mumbai: Rating agency Moody’s Investors Service said the credit outlook for banks in the Asia-Pacific region in 2013 remains stable on the expectation that they will remain insulated from the negative credit pressures affecting western banks.
It added though that banks in India and Vietnam continue to carry a negative outlook owing to asset-quality pressures.
Moody’s also said bad loans on the books of Indian banks are yet to peak. They rose to Rs1.67 trillion in the quarter ended 30 September from Rs1.13 trillion a year ago.
Still, Indian banks are better off than those in Vietnam, the credit rating firm added.
“The Vietnamese system is in much worse shape than India’s and there is a reasonably high probability that the government will need to step in and take measures to address the issue of high NPLs (non-performing loans), or face the negative economic consequences of a banking system that cannot support credit growth,” Moody’s said.
“While the government is likely to remain supportive, relatively high inflation and modest fiscal capacity mean that policy options are constrained,” the report said, referring to the Indian macroeconomic situation.