Strong wealth income will add support for Hong Kong and Singapore banks.

APAC developed market banks’ assets loan growth are expected to remain in the mid-to-low single digits, although rising interest rates may temper demand, according to Fitch Ratings.

Profitability will remain robust on the back of higher margins offsetting higher credit costs, the credit rating company said in a special report published on 12 November 2026.

Strong wealth income will add support for banks in Hong Kong and Singapore, it added.

Higher rates will benefit banks’ net interest margins (NIM), and Japan is expected to be the biggest beneficiary.

Capital ratios are expected to remain stable, although impaired loan ratios are expected to gradually rise as higher rates start affecting more vulnerable borrowers, particularly those in real-estate and consumer segments, Fitch said.

Factors to watch include borrower resilience in a higher rate environment, banks’ ability to sustain profitability beyond the interest rate cycle, geopolitical risks and supply-side shocks that may disrupt economic growth and monetary policy, and risks related to cybersecurity, operations, and compliance.