Reported 8 months ago
Moody's Rating Agency stated that the recent increase in Taiwan's reserve requirement ratio (RRR) is expected to have limited impact on banks' net interest margin and profitability, with stable core profits supported by accelerated loan growth, especially in higher-yielding foreign currency loans, steady fee income, and moderate credit costs. The central bank increased the reserve requirement ratio by 1 percentage point to 5.75% on June 13, the first increase since September 2022, aiming to ease capital inflows into the real estate market and cool rising property prices. Moody's highlighted that the policy adjustments reflect continued monitoring of banks' concentrated real estate loan risks and potential additional cautious measures as risks rise further, noting a slowdown in mortgage and property price growth rates since late 2023. The central bank's actions emphasize the growing risks in the real estate market as property prices continue to rise. Despite challenges like overseas loans maturing and pandemic-related relief loans expiring, Moody's expects banks to maintain their credit standards with low overdue loans ratios in mortgage and construction loans. They project that the ratios will remain close to current levels, although impairment loans and credit costs may slightly increase. Moody's further predicted that the central bank will likely maintain interest rates 'unchanged' this year, with potential rate cuts at a specific time.
Source: YAHOO