Taiwan Area Finance Profile 2012

Strong In 2010, Well Positioned For 2011 The Taiwanese banking sector weathered the storm of the financial crisis well and we expect its performance to be even stronger in H210, putting it in a solid position to withstand any pressures triggered by domestic and regional growth slowdowns in 2011. Loans To Pick Up The Taiwanese economy has rebounded strongly in 2010 and we believe that its improved growth prospects will translate into stronger loan demand from consumers and businesses. Client loans rose by 2.7% year-on-year (y-o-y) to TWD18.73trn in Q110 from TWD18.23trn in Q109. Monthly data about the loans of major financial institutions released by the central bank also supports our view. We note that by June 2010 loans had increased for seven consecutive months, and at an accelerating pace. With industrial production hitting record levels, strengthening consumer sentiment and firming labour market conditions, we expect loan growth to remain robust in the coming months.