The outlook for banks in Asia-Pacific is stable over the next year, says Moody's Investors Service.
"The banks' creditworthiness will stay broadly stable in 2019 because of the still-healthy economic fundamentals and good credit buffers," said Eugene Tarzimanov, Moody's vice-president and senior credit officer.
Moody's said Asia-Pacific banks' capital, provisions and profit will provide sufficient loss-absorbing buffers, and funding and liquidity will remain stable.
"In addition, recent developments on bank resolution in [Asia-Pacific] cement our view that government support for the banks will stay strong, and that senior creditors will not be required to pay for bank rescues, although Hong Kong remains an exception," Mr Tarzimanov said.
Moody's forecasts Asia-Pacific banks to face more challenging economic and market conditions in 2019.
Moody's said GDP growth in Asia-Pacific has peaked and will moderate. Credit expansion will likely continue to slow as a result of the US-China trade conflict posing a risk for banks.
Private-sector leverage remains high in many Asia-Pacific economies, according to Moody's, exposing banks to risk of asset quality impairment, as interest rates continue to rise. Growth in private-sector credit has slowed, with some markets deleveraging.
Banks remain exposed to property-related risks, despite real estate prices falling or posting slower growth in Asia-Pacific. Loans for real estate investment represent the greatest risk for banks in Australia, New Zealand, South Korea and Malaysia.
Capital flows in and out of Asian financial markets have been volatile. Further tightening in US-dollar liquidity could have an adverse effect on corporate debt repayment capacity.
In general, banks will have sufficient buffers against growing risks.
Moody's predicts that technological advancements will reshape the business models of Asia-Pacific banks in the coming years, such as digitisation allowing banks to scale down branch networks and lower costs.
Banks in Asia-Pacific will remain active issuers of green bonds, despite slower growth in green financing in 2018.