Taiwan financial institutions achieve second-highest profit in history despite year-end challenges

Taiwanese financial institutions, encompassing banks, insurance firms, securities, and investment trusts, achieved their second-highest aggregate profits in history, reaching NT$703.6 billion ($22.58 billion), a robust 46.71% increase from the previous year.

Local financial institutions in Taiwan, spanning banks, insurance companies, securities and futures brokerages, and investment trusts, reported their second-highest aggregate profits in history for the past year, according to the Financial Supervisory Commission (FSC). Despite headwinds faced by life insurers in the final two months of the year, the combined pre-tax profit reached NT$703.6 billion (U.S.$22.58 billion), marking a robust 46.71% increase from NT$479.6 billion the previous year.

Banks emerged as the major contributors to the overall profit growth, achieving record pre-tax profits of NT$505.7 billion, a notable 17.03% surge from NT$432.1 billion in 2022. Factors driving this performance included rising currency swap income, a recovery in the capital market, and double-digit percentage growth in fee income for wealth management and credit card businesses.

Securities and futures brokerages, along with investment trusts, followed suit with a combined pre-tax profit of NT$99.8 billion, marking an impressive 50.98% increase from NT$66.1 billion in the previous year. This growth was attributed to a boom in the stock market.

Despite lower-than-expected pre-tax profits of NT$98.1 billion for insurance companies last year, a significant improvement was noted from the previous year when they registered a combined loss of NT$18.6 billion. Life insurers faced foreign exchange losses in the November-to-December period due to the appreciation of the New Taiwan dollar against the U.S. dollar.

FSC Chairman Thomas Huang expressed optimism about the financial sector’s prospects in the current year. While acknowledging the resilience of the financial industry, he urged caution regarding market, credit, and liquidity risks, as well as challenges related to false information and corporate governance.

Looking ahead, the FSC aims to support the industry in embracing innovation, diversifying financial products, and advancing toward net-zero carbon emissions and sustainable development. As part of market enhancements, the commission plans to shorten the matching interval of intraday odd-lot trading on the Taiwan Stock Exchange and the Taipei Exchange from one minute to five seconds by the end of this year. The move is designed to improve odd-lot trading opportunities and efficiency, particularly for small-capital investors.

In its 20th-anniversary year, the FSC emphasizes the importance of financial stability while encouraging industry-wide innovation and sustainability efforts.