Fitch Downgrades Taiwan Banking Sector Outlook to Deteriorating

Fitch Ratings has downgraded its outlook on Taiwan’s banking sector from “neutral” to “deteriorating,” citing rising pressures on profitability and asset quality due to weakening external demand and geopolitical uncertainty.

Taiwan’s GDP growth is projected to slow from 4.8% in 2023 to 2.8% in 2024 and 2.5% in 2025, which could impact bank earnings and credit performance. While Taiwan’s banking system remains well-capitalised and liquid, Fitch warned of moderate risks in loan quality, particularly in industries affected by US tariffs.

Mortgage and construction lending have declined slightly due to tighter monetary policies, with Fitch signalling limited ratings upside without structural reforms.