APAC Financials: 2026 Outlook
Pramod Shenoi - Head of Asia-Pacific Research, Head of Financials, CreditSights
Karen Wu, CFA - Senior Analyst, Financials, CreditSights
Lim Ze Hao, CFA - Analyst, Financials, CreditSights
Trung Tran - Senior Analyst, APAC Insurance and Middle East Banks, CreditSights
3 December 2025
Insights into APAC Financials 2026 Outlook, including:
- Regional Banking Performance Divergence: Explore how our APAC Financials 2026 Outlook identifies which Asian markets—from Korea and Singapore to Indonesia and Thailand—will deliver robust returns versus those facing headwinds from NIM compression and credit quality challenges.
- Supply and Refinancing Dynamics: Discover the ~$65 billion supply forecast from Asia ex-Japan issuers in our APAC Financials 2026 Outlook, including detailed analysis of bank senior paper, capital instruments, and NBFI issuance across commercial banks, policy institutions, and insurers.
- NIM Protection Strategies Across Markets: Learn how banks in different jurisdictions are navigating margin pressures, with insights on rate cut cycles, loan growth drivers, and fee income opportunities to sustain profitability in 2026.
- Credit Quality and Asset Risk Assessment: Understand where credit costs are normalizing versus deteriorating, from Indian NBFC unsecured retail stress to Hong Kong CRE exposure and Thai bank elevated provisioning levels.
- Insurance Sector Resilience Analysis: Gauge the outlook for life and P&C insurers across Japan, Australia, Taiwan, and Korea, including solvency regime transitions, FX risk management, and capital strengthening through debt issuance.
Executive Summary
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While we had expected 2025 to be a tougher year for Asian banks than 2024, the banks have in general done well. For 2026, we expect decent performances from the banks from South Korea, Singapore, India, Malaysia, Australia, and the first tier in the Philippines; a robust performance from Japanese banks; some amount of muddling along for banks from mainland China, Hong Kong SAR, Indonesia, and Mongolia; and more challenging conditions for Thai and second tier Philippine banks.
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NIM protection is going to be a challenge for banks across jurisdictions, with net interest income growth coming from loan growth; fee income growth should be reasonable, but we expect most of the rate cut cycle in Asia to have concluded so there will be limited gains from the banks’ investment books; credit costs for 2026 are likely to be similar to that of 2025.
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NBFIs have navigated their credit environments well. From a credit perspective, we are comfortable with most Indian NBFCs and the public sector issuers, Chinese and Japanese lessors, and the Korean credit card companies. We have mixed views about the Chinese AMCs and are cautious about the Korean securities firms because of poor disclosure levels.
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Amongst the insurers, we are most comfortable with the outlook for Australian and Japanese names (we see concerns about rising yields as overdone), as also AIA and Prudential plc from Hong Kong; we expect Korean insurers to muddle along, and are cautious about Taiwanese insurers, despite the expected forbearance measures.
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We see ~$65 bn of financials supply from Asia ex-Japan issuers in 2026; this is less, however, than the combined supply from Japan ($40 bn) and Australia ($30 bn).
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