The nation’s improving economic prospects will help support local lenders over the next 12 to 18 months, Moody’s Investors Service said yesterday, citing a new report.
“Favorable economic conditions will drive loan demand higher, as well as help maintain the financial strength of corporates and individuals, which will in turn support the asset quality of the banks,” Sally Yim (嚴溢敏), vice president and senior analyst for financial institutions at Moody’s, said in the report, entitled Banking System Outlook: Taiwan.
Taiwan’s GDP growth hit a 24-year high of 10.82 percent last year. The economy is forecast to expand 4.92 percent this year, the Directorate-General of Budget, Accounting and Statistics said in February.
Moody’s expects Taiwan to post a GDP growth of 4.5 percent this year and 5.3 percent next year.
Yim said the economic recovery would further boost non-interest income for local banks, thanks to their strengthening wealth management product sales and increases in loan-related fees.
Moody’s report rated just 10 out of 37 local lenders. In the report, Yim said outlook for the banking system was stable, also because of strong liquidity and stable asset quality.
Meanwhile, Moody’s said the potential formation of a housing price bubble and significant profit volatility from high single-borrower concentration risk were among lenders’ key concerns.
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