Asian banks’ continuing progress will depend on how the authorities of individual countries react to unforeseen events.
On the surface, the Asian banking sector appears to be continuing its slow but steady recovery from the 1997-1998 crisis, with aggregate Tier 1 capital for our Top 200 growing 5.5% over 2001, aggregate assets growing 15.8% to $5433bn and aggregate pre-tax profit growing 6.5% to $32,799m. However, the start of 2003 introduced several uncertainties – with the war in Iraq and the outbreak of SARS dominating – which threatened a recovery that, at country level, has often seemed fragile. Add to this the ensuing terrorist activities in Indonesia and the recent military mutiny in the Philippines and it becomes evident on a country by country basis that the strength of the underlying macroeconomic fundamentals and the authorities’ ability to respond quickly and appropriately to the political and economic shocks that occur will determine whether this recovery can be sustained.
