Asset Depreciation Risk

(redirected from Asset Quality Risk)

Asset Depreciation Risk

In insurance, the risk of loss to the company as the result of declining investments. An insurance company generally maintains a portfolio of securities. If a stock declines or a bond defaults, it may find itself with fewer assets and the same number of liabilities. In the United States, state governments determine the investments insurance companies are allowed to make to reduce asset depreciation risk. It is one of four types of risk to an insurance company; the others are interest rate risk, pricing inadequacy risk, and general business risk. Asset depreciation risk is also called asset quality risk. See also: Legal list.
References in periodicals archive ?
High credit growth since 2014 also exposes the banking system to unseasoned asset quality risk,' it said.
"In the downward economic cycle we're in, the bank's asset quality risk is the lowest," Yuan Lin, a Beijing-based analyst at BOC International Holdings Ltd., (http://www.bloomberg.com/news/articles/2015-12-09/china-s-postal-bank-said-to-raise-7-billion-from-stake-sale) told Bloomberg.
Such a situation would likely raise asset quality risk for
Thus far, the relatively low utilization rates of many of these working capital lines due to Brazil's high interest rates further limits any asset quality risk by the big banks.
The key investment theme for Turkish banks in 2013, in our view, is low dependence on securities and higher asset quality risk, which bodes well for Yapi Kredi and Vakifbank.Source: bne
Despite rapid credit growth leading to asset quality risk to a certain extent, the ratings agency has issued a 'Stable' assignment to the outlook of the local banking sector.
Fitch said banks in the region largely meet capital requirements and believes that further capital building efforts will be prioritised to offset asset quality risk and weak earnings prospects, but also in the context of Basel III rules.
Fitch Ratings said that commercial banks in Philippines would remain financially stable because of the growing local economy and relatively low asset quality risk.
The impact of the latest regulatory NPL cap on Kazakh banks' credit profiles will depend on the extent to which banks genuinely reduce asset quality risk. The measure is applied to the unconsolidated balance sheet, which means that banks could transfer NPLs to subsidiary special-purpose vehicles to meet the 10% target.
"The close relationship with the Bank's parents has led to a high related-party exposure; while the Bank also holds deposits from some related parties, they are not necessarily the same parties and present a potential asset quality risk as well as a liquidity risk.
residual asset quality risk that could lead to a need to recapitalize
Banks in Sri Lanka and Indonesia also have a significant proportion of outstanding loans denominated in foreign currency, which could expose them to asset quality risks from currency weakness.