Spotlight on: Asia's banking sector

Spotlight on: Asia’s banking sector

Frontier financials have improved immensely over the past two decades, but Oliver Bell, manager of the T. Rowe Price Frontier Markets Equity fund, explains why Pakistan's United Bank is his sector pick of the year.

The banking systems in frontier and emerging market countries have been through a crisis in the past 20 years. Having learned from the painful experience of excess leverage and a severe bad debt cycle, lending practices have been improved in many countries, with banks today trying to operate on a more traditional basis. Most concentrate on taking deposits, making loans to consumers and to businesses, and processing transactions. This model has been supportive of profitability, if well-managed. Which is why a banking system with controlled non-performing loans is likely to be a good...