THE POOR PERFORMANCE of large Asian banks in 2003 and 2004 is, paradoxically, good news. Bank managements and regulators have taken advantage of the good economic conditions in Asia to recognize the losses stemming from problem loans. In some cases, for example in China and Korea, higher loan losses have cut into equity. Despite the lower capital levels, the balance sheet clean-up is good, because it gives these banks a stronger foundation for growth.
This rehabilitation is an important factor in a generally positive outlook for Asia's banks. Moody's has either positive or stable outlooks on east Asian bank ratings except for the Philippines.
The Philippines is not participating in the regional upturn. Bank performance and ratings...
