Finance

Home page

Finance

Fitch Ratings recommends developing countries to reduce lending

03 June 2011 08:36 (UTC +04:00)

It was published in agencyâ€™s special report â€“ â€œData on the banking systems of emerging marketsâ€.

Report says that many banking systems in the Central and Eastern Europe (CEE) and CIS countries continue to have high leverage, and stabilization indicators of loan impairment on some of these markets is expected only in 2011. Note that leverage - is the ratio of involved funds to bank’s own funds and when the ratio rises bank’s risks also increase.

Fitch Ratings notes that the rapid credit growth has continued in the second half of 2010 - the first quarter of 2011 in many emerging markets, particularly in China, Turkey, India and Brazil. Regulators seek to curb this growth in part through the use of reserve requirements and other regulatory measures in the light of concern regarding the potential impact of rising interest rates on capital flows and exchange rates. At the same time, the risks in other markets continue to flatten the growth at the expense of continued low credit to GDP ratio in Argentina, Georgia, Indonesia, Peru. In 2011, Fitch expects the stabilization of quality assets in CEE / CIS region.

At the same time, banks in CEE / CIS countries still need to resolve the situation with the high absolute levels of problem loans, most notably in Kazakhstan, Ukraine, Latvia and Lithuania, where Fitch is also concerned about the quality of capital.