Taiwan bank bad loans rise in July but asset quality ‘manageable’: FSC

The average NPL ratio is the same as in June and lower than a year earlier.

Bad loans held by Taiwan’s domestic banks rose in July, although asset quality remains manageable, according to the Financial Supervisory Commission (FSC).

The non-performing loans (NPLs) held by banks rose by $38.65m (NT$1.25b) compared to the previous month to $2.12b (NT$68.59b), official data showed.

The average NPL ratio across 38 banks remained the same as in June, at 0.14%. It is lower by 0.02 percentage points (ppt) compared to July 2025.

“The asset quality of domestic banks continuously remained manageable according to the above figures as of the end of July 2026,” the FSC said in a statement on 10 September 2026.

Coverage ratios of allowances for non-performing loans (NPL) were 941.22%, increasing by 1.71 ppt compared to the previous month.

Taiwan’s private banks are seeing merger activity in 2026, with some lenders expected to see profitability improve and franchises expand thanks to it, according to a separate report by Fitch Ratings.

Strong demand for semiconductor and AI-related products should also support the economy, and in turn private banks, the credit rating company said in a July 2026 commentary.

Taiwanese banks’ core profitability, capitalisation, and liquidity are all expected to remain stable, Fitch said.

(US$1 = NT$32.292; from the FSC)