Credit conditions for Asia-Pacific banks diverge, with some banking systems facing greater constraints than others, Fitch Ratings said in a recent release.
Reliance on oil and gas imports from the Middle East amid the conflict has increased the region's exposure to increased inflation and reduced growth, Fitch said.
This resulted in downward revisions to sector outlooks for the banking sectors in the Philippines and Sri Lanka.
Meanwhile, strong growth in China and Hong Kong and easing deflationary pressure on China have led to outlook changes to neutral, Fitch said.
Taiwanese banks will see only modest effect from an adverse Iran scenario as demand for tech-driven exports persists, according to Fitch.
The rating agency retains a deteriorating outlook on Thailand as continued low-growth conditions weigh on asset quality and profitability.
Japan's improving outlook reflects its solid corporate profits, wage growth, and earnings gains from higher domestic interest rates, Fitch said.
South Korea and India also show resilience against higher energy prices, the rating agency said.
Indonesia's outlook remains neutral, albeit with a slight normalization in asset quality, while Australia and New Zealand also continue to be generally stable, Fitch said.
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