Indian and Asia Pacific banks maintain stronger capital than US and European peers: Moody's
- IBEF
- December 9, 2025
A recent Moody’s survey shows that banks in the Asia-Pacific region, including India, have built stronger capital positions than their counterparts in the United States and Western Europe. According to the report, the region’s largest banking institutions have benefited from prudent regulatory oversight, which has helped strengthen balance sheets and improve risk buffers over the past decade. The survey found that risk-weighted asset (RWA) densities across Asia-Pacific banks remain aligned with underlying asset risks and actual credit losses, though they vary across markets. Higher RWA density reflects a larger share of risk-bearing assets, requiring stronger capital buffers for stability. In contrast to Western markets, Asia-Pacific banks have consistently reported healthier CET1 ratios, signalling improved resilience. As of end-2024, the average CET1 ratios for major banks in Hong Kong (18.0%), India (14.7%), and Korea (14.5%) all exceeded those of the largest banks in the US (13.5%) and Western Europe (13.8%).
Moody’s attributed the strength of large Indian private-sector banks, such as SBI, ICICI Bank, HDFC Bank, and Axis Bank, to robust internal capital generation that has outpaced their RWA growth in recent years. Additionally, these banks enjoy seamless access to capital markets, enabling timely equity mobilisation when required. CET1 capital, comprising core equity and retained earnings, forms the first line of defence against financial stress, and higher ratios indicate a superior shock-absorption capacity. However, the report cautioned that government-owned banks in India continue to lag behind private institutions on both CET1 and leverage metrics. The four Indian banks included in the survey together represent nearly 50% of total system assets, underscoring their pivotal role in maintaining systemic stability and supporting India’s expanding financial ecosystem.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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