DUBIOUS asset quality is likely to be an ongoing problem for Asian banks this year, according to Thomson BankWatch Asia president Philippe Delhaise, who says tougher competition will also hit regional banks.
The region's banking sector is being opened up, while strong economic growth means demand for credit is on the rise, stretching the capacity of some financial institutions.
Some institutions have also been faced with the problem of existing bad debts.
'One thing obvious in the last two years is that the matter of bad debts had to be tackled, and one way or another governments have tackled it,' Mr Delhaise said.
India was an example of a country seeking to recapitalise state banks faltering under a deadweight of bad and doubtful debts.
Indian state banks' balance sheets had been sanitised, Mr Delhaise said, while a country like Korea - some of whose banks looked better on paper - had yet to tackle major balance sheet problems.
He said it was unclear how Beijing planned to rescue its banks. 'We don't yet know how they're going to do it,' Mr Delhaise said, adding that Thomson BankWatch was not going to issue ratings on mainland banks if it could not quantify bad loans.
