Fitch: Slight improvement for Taiwan banks

Fitch Ratings said in a new report that it expects Taiwanese banks to benefit from the modest global economic recovery and generate slightly better earnings in 2010.

However, the improvement will likely be moderate, given the sector's chronic structural competition issues, the agency said, as well as a potential for elevated credit costs.

Concerns over potentially higher credit costs in 2010 mainly stem from the need for Taiwanese banks to make additional loan provision charges in preparation for the new provision policy under accounting rule 34, which is scheduled to be effective from 2011, Fitch said.

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