Most banks across the Asia-Pacific region are projected to deliver largely stable profitability in 2026, even as net interest margins (NIMs) are expected to continue easing.
Uncertainty around credit costs and ongoing macroeconomic pressures remain in several markets, particularly Taiwan, Hong Kong, China, and Thailand, Fitch Ratings said in a report released in January 2026.
In most countries, loan yields are forecast to decline more quickly than funding costs, leading to modest margin compression.
Fitch added that margin pressure should be only slight, and any near-term impact on operating profit and risk-weighted assets (RWA) is expected to be manageable.
Strong loan growth is anticipated in India, Vietnam, the Philippines, and Indonesia, where credit expansion remains a key driver of profitability.
Separately, Moody’s Ratings noted that banks in the Asia-Pacific region hold stronger capital buffers than their peers in the Americas and Western Europe.
Earlier Fitch estimates indicated that six markets — Taiwan, New Zealand, Australia, South Korea, Singapore, and Hong Kong — are likely to experience margin declines in 2026.
Fitch also cautioned that rising competition, regulatory and conduct risks, and the normalisation of fee and trading income in some markets could introduce greater earnings volatility both within individual banking systems and across the region.
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