The Asian Pacific banking sector is likely to record a 25 percent increase in profit for 2010, attributed to both lower credit costs and lower provisions, according to Bank of America Merrill Lynch.
Some experts said that Asian banks are also better positioned to deal with tighter regulations and capital requirements.
The economic crisis triggered by the collapse of Lehman Brothers has led governments to implement tighter financial measures. And the results from contnuing negotiations of the Basel Committee on Banking Supervision will likely change the banking industry.
The new rules will see Asian banks will emerge stronger.
"Asian banks’ risk management has improved… balance sheets are stronger and we are in a much better position to wear it through. We will see more capital required by the banks. What that magic number is, is still yet to be seen," said Alistair Scarff, head of Asia Financial Institutions Research at Bank of America Merrill Lynch.
"On the liquidity side, Asia compared to most other developed markets, is liquid. Most of the banks are heavily funded by deposits."
The bank also said that the move of the Chinese central bank to increase capital requirements will support sustainable growth.
"When we are looking at some of the capital raisings at the moment, the one that’s getting the most attention right now – the Chinese banks. That’s capital to support growth as opposed to capital to fill a hole in a balance sheet. So, it’s a much different story there," Scarff said.
Bank of America Merrill Lynch added that lending business in China is likely to see a 20-percent increase this year, compared to the 30-percent growth recorded in 2009.