Taiwanese banks to maintain sufficient buffers and stable fund

But tariff shifts may push up nonperforming assets.

Taiwan’s banking sector is expected to maintain its solid capitalisation through 2027 thanks to their “prudent capital policies,” said S&P Global Ratings in its midyear outlook report.

As of end-December 2024, banks’ average common equity Tier 1 capital ratio stood at 13%. This should provide a sufficient buffer against unexpected economic volatility, said YuHan Lan, primary credit analyst, S&P Global Ratings, in the outlook report published in July 2025.

A well-diversified retail deposit base will also support Taiwanese banks’ stable funding resilience, she said.

“A high ratio of household deposits (about 66%) to total system deposits reinforces banks' funding stability. The sector's liquidity ratio also remains healthy, with an average loan-to-deposit ratio of 71%,” Lan wrote.

However, loan growth will moderate over the next year amidst heightened uncertainties from the US tariff shifts.

“Whilst the overall banking sector's asset quality should remain healthy, higher economic volatility and softening demand in Taiwan's property market could slightly increase banks' recognition of nonperforming assets,” Lan said.

Profitability should remain modest but resilient relative to regional banks, she said.