Rapid expansion often puts pressure on banks' financial profiles. Relaxed underwriting standards, inadequate controls and speculative investments typically accompany strong credit and asset-price growth. This build-up of credit risks will constrain upward rating momentum and could even lead to downgrades for banks in the region, particularly ones with greater sensitivity to Chinese risk, where the build-up in credit has been greatest and which accounts for 37% of GDP in APAC.
Credit growth in China remains relatively rapid and is likely to gather pace in support of generating higher GDP, with credit-to-GDP likely to exceed 200% in 2013. But funding and capital constraints in the banks could act as a brake on growth a