RTTNews - Thursday, Fitch Ratings maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.
The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled Stress Test on Malaysian Banks, where it attempts to simulate a fairly-stressed scenario for Malaysian banks.
The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.
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