Lending costs at five major state-run banks rise

Taiwan’s five major state-run banks—Bank of Taiwan Co (臺灣銀行), Land Bank of Taiwan (臺灣土地銀行), Taiwan Cooperative Bank Co (合作金庫銀行), First Commercial Bank Ltd (第一銀行), and Hua Nan Commercial Bank Ltd (華南銀行)—recorded an average interest rate of 2.206 percent on newly booked loans last month, marking a 0.101 percentage point increase from March. The central bank attributed the rise to tightening credit conditions as corporate earnings and investment activity drove higher loan demand, particularly in technology sectors scaling up production. The increase was observed across all major lending categories, signaling a general repricing of credit rather than a sector-specific shift. Working capital loans, used by companies for short-term liquidity, saw the strongest demand growth, reflecting expansion among local technology firms meeting rising customer orders. In contrast, the housing segment’s average mortgage rate inched up slightly to 2.307 percent from 2.306 percent the previous month. The central bank noted that the trend in state-run banks serves as a benchmark for private lenders setting borrowing rates. While higher rates may improve banks’ net interest margins, they also elevate financing costs for borrowers, particularly businesses reliant on short-term credit for daily operations. The data underscores a gradual adjustment in Taiwan’s credit environment amid robust economic activity in key industries.