Foreign expansion a matter of survival for Asian banks

Asian banks will continue expanding overseas to grow faster and improve yields.

Standard and Poor's Ratings Services expects most rated banks in Hong Kong, Singapore and Malaysia to further expand in a planned and prudent fashion in the next several years.

These banks' sound financial standing, conservative risk management and support from their governments or parent firms are expected to continue to support the ratings in many cases.

Banks in Hong Kong and those in Singapore and Malaysia are likely to continue expanding regionally to take advantage of higher yields and the growth potential in emerging markets. Other key factors in the regional expansion of banks are the increasing linkages among various Asia-Pacific economies and fierce competition in home markets.

S&P also acknowledged the growth potential in emerging Asian economies such as China, India, Indonesia and Vietnam due to their sheer population and lower banking penetration. The net interest margins in some of these countries was also significantly higher than in Singapore, Hong Kong and Malaysia.