Taipei Fubon Commercial Bank Co. Ltd.

The positive rating outlook reflects the rating outlook on the government of Taiwan and the government's capacity to support banks such as Taipei Fubon Bank that have moderate systemic importance. We see a moderately high likelihood that the government would support the bank in times of financial distress. The outlook also reflects our view that the bank will maintain strong capitalization and satisfactory asset quality over the next one to two years. We continue to view Taipei Fubon Bank as the core member of Taiwan based Fubon FHC group, given the bank's material representation and contribution to the group. We may revise the outlook on the long-term rating on the bank back to stable if we take similar action on

...Proactive capital management and prudent growth strategy support the bank's strong capitalization. In our view, Taipei Fubon Commercial Bank Co. Ltd. (Taipei Fubon Bank) will likely remain proactive in its capital management to support its various business growth strategies. The Taiwan government has identified Taipei Fubon Bank as one of the six local banks it considers domestic systemically important banks (D-SIBs). Considering this, we believe the bank will remain cautious in the management of its capital consumption and maintain stable earnings to underpin its capital stability over the next one to two years. Adequate credit risk control mechanism underpins its good asset quality despite above-average overseas exposure. We forecast that Taipei Fubon Bank will pursue slightly higher growth than the domestic average over the coming few years, with a shift toward overseas lending and small and mid-size enterprise loans. At the same time, we believe the bank will uphold its adequate credit...

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