We have, however, seen more facilities where requirements for personal guarantees have been relaxed. It’s also possible that some of the regional banks might, in their eagerness to diversify loan portfolios, be lending to clients that major banks are turning away. It is, of course, not possible to interpret all these trends unequivocally as indicators of unsound banking.
And it would be unrealistic to expect impaired assets to stay as low as they are now. Credit quality necessarily ebbs and flows with the fortunes of the economy and particular sectors. What is important is that any deterioration is manageable against banks’ capital, and that they recognise early the need for additional provisions.