The recent trade pact between the US and Taiwan has reduced tariff-related risks and broader economic uncertainties for Taiwan’s banking industry, according to Fitch Ratings.
The agency now expects loan growth to reach the high single digits in 2026, up from its earlier projection of around 5%, supported by rising overseas investments and stronger corporate borrowing demand.
Fitch said more stable economic conditions should strengthen Taiwan’s banking operating environment, with asset quality and profitability across the sector likely to outperform its earlier estimates. The comments were made in a report released on 30 January 2026.
On 15 January, Washington and Taipei announced a new trade agreement that lowered tariffs to 15%. As part of the deal, Taiwanese technology companies are expected to invest $250m to expand production in the United States.
Fitch upgraded its outlook for Taiwan’s banking sector from deteriorating to neutral on 28 January, noting that pressure on loans linked to export-driven industries has eased following the agreement.
The agency now forecasts the sector’s impaired loan ratio will stay below 1%, compared with its earlier estimate of 1.2%.
Previously, Fitch had projected slower loan expansion and softer wealth management income in 2026, expecting net fee income to fall amid weaker loan growth and uncertain market conditions, as outlined in its late-2025 outlook.
However, with the trade deal expected to boost market confidence, Fitch has adopted a more optimistic view on wealth management fees and overall banking sector profitability.
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