Taipei Fubon Commercial Bank well-buffered to withstand market volatility

Asset quality of corporate lending will weaken moderately, however.

Taipei Fubon Commercial Bank is expected to maintain its solid solvency and robust liquidity through 2026.

The bank is well-buffered to withstand the negative effects of ongoing volatility due to the trade-related tensions, its potential impact to Taiwan’s economy, and the strengthening of the new Taiwanese dollar, according to Moody’s Ratings.

TFCB’s problem loan ratio of 0.42% as of 31 March 2025 is expected to only log a “very mild increase” over the next 12 to 18 months, the ratings agency said.

However, the asset quality of corporate lending, especially for borrowers with higher revenue generated from the US, will weaken moderately.

“The asset quality of the bank's residential mortgage and property-related lending, which together constitute around 50% of the bank's gross loans, remains stable with low non-performing loan formation,” Moody’s said. A low single-digit growth is expected in this sector due to government-initiated property market credit control measures in 2024.

Profitability is expected to improve modestly on the back of steady non-interest income growth from wealth management and credit card-related fee income.

Funding and liquidity will remain credit strengths, Moody’s added.

“The funding structure remains sound, with liabilities due to customers comprising 88% of the bank's total liabilities. Liquid banking assets to tangible banking assets remained high at around 29.5% as of 31 March 2025,” it said.

The government's willingness to support the banking system is strong, it added.