Asia-Pacific’s largest banks maintain stronger capital buffers than their peers in the US and Western Europe, Moody’s Ratings said in a new analysis.
The agency noted that major APAC banks generally post high Common Equity Tier 1 (CET1) ratios due to stringent regulatory frameworks across the region. Many regulators apply conservative rules when calculating risk-weighted assets (RWAs), including tight limits on the use of internal models.
Moody’s highlighted that Australia’s regulator, APRA, goes even further by enforcing capital requirements that exceed the Basel Committee’s global standards.
However, the picture is not entirely positive. As margins come under pressure, banks in developed APAC markets are showing a greater willingness to take on risk. Fitch Ratings previously pointed out that Australian banks, for example, have increasingly targeted growth in the SME segment.
Some institutions may look to boost profitability through new channels such as social media. According to SAS, banks that build and leverage financial media networks could raise non-interest income by 20%–30% within two years.
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