2nd Quarter 2022: Loan Book Watchlist
Post-COVID knock-on risk, relating mainly to inflation due to the supply-chain bottlenecks, and Evergrande/China risk manifested relatively higher severity during the 3rd quarter, with implications for the banking book of financial institutions, as shown below:
As world's top central banks shift their focus away from pandemic
to inflation, the following loan book tactical actions are recommended:
- Credit write-ups need to provide the mitigation coverage for inbound and outbound supply chain risks faced by the borrowers
- For the banking book investments and loans, direct or indirect Evergrande exposure needs to be examined, with recalibration of exposure limits to Chinese entities
Helping you build a resilient loan book,
Economic conditions affect the performance of firms and also impact the credit portfolios of lending organizations. Quarterly Review: Loan Book Watchlist (the “Watchlist”) highlights the trends due to changes in macroeconomic factors. The Watchlist presents forward-looking statements about the future economic conditions and its near term impact. The statements made are illustrative and subject to risk and uncertainty. Readers should consider limitations of this analysis and should not place undue reliance.