Coronavirus will hit profitability of Asia Pacific banks through 2021 - Fitch Ratings

CNBC reports that according to the Fitch Ratings, Asia Pacific banks will find it increasingly challenging to maintain their financial performance as economies around the world get hit by the coronavirus pandemic.

The ratings agency earlier this month downgraded the outlook for 10 banking systems in the region to "negative." All 17 banking systems in Asia Pacific that Fitch assesses now have a "negative" outlook.

But the outlook assessment doesn't necessarily indicate that economies in the region face higher risk of financial instability, Fitch's Head of Asia-Pacific Bank Ratings Jonathan Cornish said on Tuesday.

"We wouldn't say that it's a risk. Definitely in terms of the performances of the banks, we expect them to weaken over the course of (2020) and (2021). But still the banks are generally coming off a pretty sound starting point, with the exception, of course, with a few banking systems mainly in emerging markets," he told CNBC.

"But by and large, because of the global financial crisis and the fact that regulators have required banks to build up additional amounts of capital and also improve their liquidity, the starting point is a lot better than what we would have seen otherwise," he added.