The article deals with one of the complex problems of the functioning of the modern banking system in East and Southeast Asia - a high level of non-performing loans. The accumulation of this debt by credit institutions causes a deterioration in bank balance sheets, limiting lending to the real sector. Despite large country differences in this indicator, after a long course of the pandemic, it already reaches a critical level in a number of them. Due to the strong negative impact of COVID-19 on financial stability, regulators are having to develop specific procedures to identify, mitigate risks, ensure adequate liquidity and maintain market confidence. As government support programs, moratoriums and loan guarantee schemes to overcome the crisis consequences of the pandemic end, banks are increasingly beginning to be affected by the economic recession. A number of lowincome countries in Asia are already preparing to settle or cancel debts related to COVID-19. The policy of the US Federal Reserve in the field of raising interest rates exacerbates the position of Asian banks, leading to large financial losses. According to experts. after the end of the pandemic, NPL ratios for the bulk of Asian banks will be between the relatively low levels recorded during the global economic crisis and the stress indicators that arose during the 1997 Asian financial crisis. Hidden asset quality risks include a weaker outlook for the corporate sector, a rising share of interest moratoriums in South and Southeast Asia, losses for banks due to stress on China’s commercial real estate sector, and high household debt due to higher interest rates in South Korea.