The current economic downturn is expected to affect only a few credit ratings, if any at all, on banks in countries that are part of the Association of Southeast Asian Nations (ASEAN), said Standard & Poor's Ratings Services in its latest report.

It said this is because a cyclical downturn, which is already showing signs of having bottomed out, had been factored into them, said the report titled, ''Few ASEAN Bank Ratings Expected To Be Affected By Current Downturn.''

''Although ASEAN banks weren't affected much by the US sub-prime crisis, financial market crunch or direct exposure to distressed US financial institutions, they are certainly not immune to their home economies' performance,'' said Standard & Poor's credit analyst Ritesh Maheshwari.

Slower economic growth, or recession in some cases, is already causing earnings declines and a rise in non-performing loans. Singapore banks, one of the seven ASEAN banking systems discussed in the report, are resilient to a recession--having had years of strengthening their balance sheets. They have low levels of impairment, good provision coverage, and adequate capitalization, said Standard & Poor's credit analyst Mr. Ivan Tan. Although credit expanded significantly in the real estate sector in 2006-2007, we don't expect it to be an immediate threat to asset quality.

''Although we believe Philippine financial institutions are stronger and better managed today than they were during the Asian financial crisis, the banking system's fragmented nature and still-considerable level of non-performing assets, vis-à-vis capitalization, remain key risks,'' Mr. Tan added.

Banks in Thailand have adequate capitalization and liquidity, in our view. We expect the ratings on most Thai banks to be unaffected in our base-case scenario of 3.3% economic contraction in fiscal 2009 and 2% growth in fiscal 2010. Nevertheless, any escalation in political tension or deterioration in the economy could have a severe impact on the banking industry and may lead to rating downgrades for the weaker banks.