After two years of Covid-19-induced economic slowdowns, escalating bad debt and meagre bottom lines, south-east Asian banks are primed for enhanced profitability and healthy credit growth in the coming months, riding the wave of higher interest rates region-wide.
As a rule, when central banks raise policy rates, in this case following the lead of the US Federal Reserve, which has hiked its policy rate from 0.13% in January to 4% in November, banks enjoy a period of higher net interest margins (NIM) as they hike lending rates quickly, while dragging their feet on the deposit rate.
