Taiwanese banks poised to break $6.5b year-end lending target

The government’s new economy projects is fuelling lending demand.

Taiwanese banks are well-positioned to smash the $6.5b (NT$200b) lending target in 2018 as they step up lending in support of the government’s economic blueprint to upgrade its industries, reports Taiwan News. 

Also read: Can Taiwanese banks keep a lid on overseas exposure risks?

Lenders extended NT$199.4b in support of ventures linked to the flagship government policy by President Tsai Ing-wen called 5+2 Innovative Industries Plan which aims to speed up the country’s transition away from contract manufacturing and into new growth areas like intelligent machinery, Asia Silicon Valley, green energy, biomedicine, national defense and aerospace, new agriculture and the circular economy.

The Financial Supervisory Commission earlier pledged to reward banks who support programmes related to the 5+2 innovative industries plan.

However, banking profitability is expected to remain flat over the coming quarters amidst expectations of higher interest rates brought about by the Fed’s tightening. "[O]verall profitability to remain flat and largely constrained by keen competition and limited growth in non-interest income,” S&P said in a previous report.