Taiwan's banking sector shows resilience amid the impact of the Iran war and US tariff policy uncertainties, a Fitch Ratings analyst said in a Tuesday release.
The rating agency has maintained a neutral outlook for the island's banking sector since January.
The sector sees manageable effects from the Iran conflict, balanced by strong global semiconductor and AI-linked demand as well as greater investments, according to Jonathan Cornish, Fitch's head of Asia-Pacific financial institutions.
The rating agency expects Taiwan's GDP to expand 9.4% and 4.8% in 2026 and 2027, respectively, Cornish said.
Bank loan growth will widen to 10% this year from 6% last year, as strong corporate lending and increasing offshore borrowing demand boost economic growth, the analyst said.
Impaired loan ratio could slightly rise to 0.8% from 0.7% last year, although it will remain the lowest in the region, Cornish said.
Fitch holds mostly neutral outlooks for other Asia-Pacific banking sectors, including in China and Hong Kong, although Thailand, the Philippines, and Sri Lanka have received deteriorating outlooks.
Japan is the sole country with an improving outlook given better profitability prospects due to gradually rising interest rates, Fitch said.