Asia Loan Bankers Brace for Tougher Competition as Margins Compress

Asia loan bankers are bracing for tougher competition and thinner margins as subdued deal flow and stronger borrower bargaining power reshape the lending landscape.

Bloomberg data show G3 loan volumes in Asia-Pacific excluding Japan fell 6.7% in 2025 to a two-year low of USD189bn, as tariff uncertainty and elevated US interest rates led some companies to delay dollar borrowing or shift to local-currency funding.

Over the same period, G3 bond issuance jumped 27% to a four-year high of USD317bn, diverting funding away from loans.

UOB’s Samuel Tan said pricing compression should persist for top-tier borrowers, although the pace may slow as banks face funding-cost constraints.

Demand is being supported by liquidity and private credit, with data-centre financing emerging as a key 2026 theme for Asia loan bankers.