1. Taiwan Banking Trends Time to Change Gears? Financial Services Ratings
Mei Chiang
Director
Financial Services Ratings
Taiwan Ratings Corp.

2. Changes in Taiwan’s financial architecture have been proceeding in a gradual fashion.

3. Improving Asset Quality

4. Improving Asset Quality

5. Improving Asset Quality

6. Rebuilding Capitalization

7. Pressured Profitability

8. Although Taiwan’s banking sector has made a good recovery from its NPL woes, the changes made have not been a radical break from the past.

9. Industry Structure Still Fragmented
Major M&As
Market share
Acquirer
Acquired
Pre
Post
06/04
Feb. 2002
Taishin Int'l Bank
Dah An Bank
1.4%
2.3%
2.7%
Oct. 2003
UWCCB
Cathay United Bank
2.9%
3.6%
3.7%
Dec. 2003
Chinatrust Bank
Grand Bank
3.8%
4.5%
4.9%
Sept. 2004
E.Sun Bank
Kaohsiung BB
1.5%
1.7%

10. Industry Structure Still Fragmented

11. Industry Structure still Fragmented

12. Emergence of FHCs

13. Gradual pace of change set to move up a gear following the recent announcement of the launch of the second stage of financial reform.

14. Second Stage Financial Reform Targets
By the end of 2005
Three financial institutions reach to have individual market shares of 10%
Number of government owned banks to be reduced to 6
By the end of 2006
Number of FHCs to be reduced to 7
To have at least one domestic financial institution operated by a foreign entity or listed overseas

15. Taiwan Ratings Corp. http://www.taiwanratings.com Established in 1997
Major shareholders: S&P,TSEC,JCIC
Current published ratings:
Financial institutions: 76
Corporations: 34
Bond funds: 27
Structured finance: 9
Issues: NT$ 1.2 trillion