The cooling maket puts loan quality under pressure.
Declining property prices will place some pressure on local banks' loan quality, but Fitch Ratings expects the banking system to remain resilient against rising property risks.
In a report released today, Fitch stated that potential losses from mortgages remain minimal given borrowers' healthy household balance sheets and banks' adequate collateralisation.
"We anticipate loan losses to rise as the property market continues to cool, but Fitch expects the regulator to remain vigilant for signs of stress. Banks' corporate and regional exposures--including China-related loans, which are 20%-25%--will drive loan quality," the report stated.