Fitch warns Macau banks of increased risks

2013-5-27

From：Macau Business

Fitch Ratings says in a new report issued last week that Macau banks could see their risk profiles weaken, as their exposure to the mainland continues to climb.

The agency expects credit growth to accelerate to 30 percent this year, from 26 percent in 2012, primarily led by mainland-related trade financing.

Exposure of Macau banks to the mainland is likely to grow further, given increasing interconnectivity between the two banking systems and economies, Fitch warns.

“Macau’s mainland exposure was 16 percent of total assets at end-2012 based on official data, but indirect lending is understated in the calculation,” the ratings agency wrote.

Fitch believes that the actual exposure of Macau banks to the mainland relative to total assets, is almost the same size as that of Hong Kong banks – around 25 percent.

The ratings agency adds that Macau banks are also exposed to mainland risk through their lending to the gaming sector, whose revenues are mainly supported by mainland tourists.

Copyright@Macau Business