The research shows that a comparison of the largest banks in the Asia-Pacific systems with their peers in the US and Western Europe shows that they have generally built strong capital positions under prudent supervisory supervision.
Furthermore, the report noted that the risk-weighted asset densities (RWA) of major banks in Asia Pacific reflect their underlying asset risks, in line with their credit losses over the past decade. It also added that banks’ RWA density varies across the Asia-Pacific region. Risk-weighted assets (RWAs) represent a bank’s assets adjusted for risk levels, meaning that loans or investments that are considered riskier are given a higher weight. A bank with a higher RWA density indicates that a larger portion of its assets carries a higher risk.
Explaining the power of capital, Moody’s highlighted: “Large private sector banks in India have high CET1 capital adequacy and high leverage ratios because their internal capital generation has exceeded their RWA growth in recent years, and they can easily raise equity from the capital markets if necessary.” CET1 capital, or Common Equity Tier 1 capital, refers to a bank’s core capital, mainly common stock and retained earnings, which serves as the first line of financial protection against losses.
A higher CET1 ratio indicates a stronger capacity to absorb shocks without impacting savers. The report noted that as of the end of 2024, the average reported CET1 capital ratios of the major Hong Kong, India and Korea banks in the sample were 18.0 percent, 14.7 percent and 14.5 percent, respectively, all above 13.5 percent for the four largest U.S. banks and 13.8 percent for U.S. banks. top six banks in Western Europe.
According to the study, these banks can also easily raise equity in the capital markets if necessary. However, the report said their peer state-owned banks remain weaker than private banks on both measures. The report attributes the higher RWA densities in India, Vietnam and at certain Chinese banks to the use of the standardized approach, a regulatory method that assigns fixed risk weights rather than relying on banks’ internal risk assessment models.
It added that regulators in India have announced plans that will allow banks to move to the more advanced IRB (Internal Ratings-Based) approach by 2028, a move that is expected to reduce RWA density if successfully implemented. For India, the sample included State Bank of India, Axis Bank, ICICI Bank and HDFC Bank, which together account for about 50 percent of system assets.
In total, the report assessed a total of 35 banks across eight major banking systems in Asia and the Pacific, representing 75 percent of the total assets of all assessed banks in these markets.
Published on December 8, 2025
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