Link to Fitch Ratings' Report: Macro-Prudential Risk Monitor Jan 2013Jan 30 - Fitch Ratings says in its latest Macro-Prudential Risk Monitor that
global real lending growth was 3.6% in 2012, much the same as in 2011 and down
from 4% in 2010. This is well below a pace that would cause renewed concerns
Real credit growth in the developed world was a meagre 0.5%. The pace of credit
contraction has declined in a number of countries but there are few signs of any
major pick up in credit growth. By contrast in EMs, even though generally
slowing, credit growth was around 7.5% in both Latin America and Asia, 5.5% in
Middle East/Africa, but only 1% in Emerging Europe.
The ratio of credit to GDP was stable in 2012 at 160% on average for developed
markets and 53% in EMs. Despite substantial falls in some crisis countries,
there is no sign of a generally falling trend in credit/GDP. However, in the
developed world, credit/GDP is falling increasingly below trend and indeed is
now below trend in the majority of countries.
The combination of stable credit/GDP and generally slowing real credit growth
explains the continued progression of countries into lower risk categories as
measured by Fitch's Macro-Prudential Risk Indicator (MPI). Australia, Denmark,
Malta and the Netherlands and in EMs Brazil and Colombia all move into the MPI 1
category in the latest report.
Rapid lending growth is confined to a handful of emerging markets. 13 countries
- all EMs - experienced real credit growth of more than 15% in 2011/12 and
therefore are in the MPI 2 category. Credit growth picked up significantly, to a
double-digit pace, in Azerbaijan, Belarus, Bolivia, China, Guatemala, Saudi
Arabia and Venezuela. But Africa has the most countries showing a significant
pick-up in real credit growth - Ghana, Lesotho, Rwanda and Zambia. The increase
is from a low base and reflects increased bank lending penetration alongside
rapid economic development. There is little evidence of asset bubbles, though in
some cases (Angola, Cameroon, Gabon and Rwanda) data limitations may obscure
Increased MPI scores are confined to EMs: Ghana, Qatar, Russia, Venezuela and
Zambia all rise to MPI 2 in this report. There are no new MPI 3s.
Sluggish or slowing credit growth brings lower MPI scores in Cyprus and Uganda
(MPI 2) as well as Australia, Brazil, Colombia, Denmark, Malta and the
Netherlands (MPI 1). The lower score for Cyprus is because it's former MPI 3
score, which pre-dates the current banking crisis, was based on 2009 data which
drops out of the assessment period (2010-2012) in this report.
Changes in bank Viability Ratings result in three BSI changes: Azerbaijan and
Ireland improve to 'b'; Cyprus weakens to 'c'.
This report updates the systemic risk indicators Fitch has published since 2005.
Formerly the Bank Systemic Risk Report, the Macro-Prudential Risk Monitor
identifies the build-up of potential stress in banking systems due to a specific
set of circumstances: rapid credit growth associated with bubbles in housing or
equity markets, or appreciated real exchange rates, the latter sometimes
associated with asset market bubbles. The focus of the report is therefore only
one potential source of bank systemic stress.
The latest "Macro-Prudential Risk Monitor" is available at www.fitchratings.com.
Additional information is available at www.fitchratings.com.