COVID-19: Moody\'s says loan moratorium may lead to greater build-up of credit losses for banks

The loan moratorium extended by banking regulators in countries like India and China to deal with the liquidity crunch amid COVID-19 crisis will provide temporary relief to borrowers, but will constrain banks from taking proactive recovery actions and could lead to an even greater build-up of credit losses once the moratoriums are lifted, according to Moody's.

In a report on Asia Pacific region, Moody's on Tuesday said while policy stimulus will shore up credit quality for larger companies in sectors, including airline and oil and gas, Asia's banking sector profitability will also decline from deteriorating asset quality and lower net interest margins.