Taiwanese banks’ profitability to weaken in 2026 as loans and wealth sales slow

Wealth management sales may moderate.

Taiwanese banks are expected to see profitability and asset quality weaken on slowing loan growth and fee income on the back of market uncertainties.

“We expect net fee income to decline as loan growth slows and wealth-management sales moderate amidst market uncertainties,” said Fitch Ratings in its 2026 outlook report.

Banks are expected to retain their capitalisation through 2027, based on a midyear report by S&P Global Ratings, which highlighted banks’ well-diversified retail deposit base.

Taiwan’s outlook remains clouded by uncertainty over US tariffs, which is likely to weigh on economic conditions and particularly banks in 2026, says Fitch Ratings.

If the US increases tariffs for Taiwan’s high-tech products— which account for over 70% of total exports to the US— it could hit corporations. Weaker US consumption could also weigh on exports.

Fitch projects loan growth to slow to around 5% in 2026, from 6% or 7% in 2025, as corporate credit demand weakens.

Property could be another issue for Taiwanese banks. An earlier report by S&P Global Ratings warned that property loans could push up bad loans in the market over the next 1-2 years.

Banks’ credit costs are also expected to pick up in anticipation of higher impaired loans. Net interest margins (NIM) should remain stable, however, thanks to lower funding costs.