Taiwan’s economy helps banks to strong results

Taiwan’s resilient economy and swift government action against the first wave of Covid-19 in 2020 has helped the country’s banks to a strong performance in the Top 1000 banks ranking.

Taiwan’s gross domestic product increased by 2.98% in 2020, thanks to government steps to avoid a full lockdown, and a boom for its technology companies and manufacturers. However, since mid-May, the country has been experiencing a second Covid wave, which could have an impact on the numbers recorded for 2021.

Despite an increase of just 6.59% in Tier 1 capital, CTBC Bank retains its top place in the country ranking. The low increase in capital has had an impact on its overall Top 1000 ranking, however, with the bank falling five places to 160th.  

Also in the country ranking, BOT moves into second place, pushing Mega International Commercial Bank (MICB) down to third. Thanks to its Tier 1 capital increasing by 16.93%, BOT also climbs five places up the Top 1000 ranking to 172nd.

Looking more closely at CTBC Bank’s performance, it has dropped from second place to 10th in the best-performance rankings, coming last among the 10 largest Taiwanese banks for growth, profitability and operational efficiency. The bank also took the biggest hit to its operational income, falling by 41.96% year-on-year, compared with the second biggest loss of 14.43% from Bank of Taiwan (BoT). 

CTBC Bank has a far better performance in the profit margin category, however, increasing by 1,123.57%, and its cost-to-income ratio leaping by 2,154.65%.

Meanwhile, Cathay United Bank (CUB) takes over the top spot overall in the best performing ranking from last year’s number one, E Sun, which drops to third. CUB is the only bank to see a positive result in return on risk-weighted assets at 3.75%, while all other banks recorded a negative result.

Overall, all of the banks in Taiwan perform well, with only a very small score margin between top-placed CUB — first in the metrics for profitability and return on risk, with a score of 5.81 — and bottom-placed CTBC Bank, with a score of 5.19. By comparison, TCB, at third, also takes two first-place positions for operational efficiency and liquidity [score?].

There are mixed results for non-performing loans (NPL). CTBC’s NPL ratio increased by 15%, while those of Bank of Taiwan, Taipei Fubon Commercial Bank, and Land Bank of Taiwan all declined by 3%. However, both First Commercial Bank and E.Sun both saw no change.