International branches of Taiwanese lenders recorded historically high collective net profits of TWD28.99bn ($918.8mn) in the first quarter of 2026, according to data from the Financial Supervisory Commission (FSC) released on May 17. The figure represents an 8.6% year-on-year increase for the three-month period, Taipei Times reports.

The rising profitability shows a critical realignment in capital. As geopolitical friction fractures traditional trade routes, Taiwanese financial institutions are successfully rotating resources away from China to secure higher returns across Southeast Asia and Western markets.

Strong interest income, higher fee revenue and declining bad debt provisions drove the performance, the FSC said. These factors neutralized a drop in investment gains caused by volatile foreign exchange and fixed-income markets.

Hong Kong remained the main engine for offshore earnings. Net profit in the territory rose 5.1% y/y to TWD13.39bn ($424.4mn), commanding a 46.19% share of total overseas profits.

Other regional hubs delivered mixed results during the quarter. Singapore came second by generating TWD3.42bn ($108.4mn), while the US ranked third with TWD3.26bn ($103.3mn). Operations in China generated TWD2.24bn ($71.0mn) and branches in Japan brought in TWD1.67bn ($52.9mn).

Unfavourable currency and bond market shifts dragged down operations in China. Net profit there plunged 19.71% y/y from the TWD2.79bn ($88.4mn) recorded in the same period last year.

Conversely, lenders capitalising on Taipei's New Southbound Policy saw profits surge 15.9% y/y to a record TWD7.51bn ($238.0mn). The state-backed initiative targets deeper trade links with 18 countries across South Asia, Southeast Asia, Australia and New Zealand. Units in Singapore and Australia booked the largest profit gains under this strategy, while branches in Vietnam suffered the deepest contraction.

Geographically, Asia dominated allocations. Lenders concentrated dense branch networks in the region to rake in TWD24.07bn ($762.9mn), or 83.03% of the global total.

The Americas followed with TWD3.43bn ($108.7mn), or 11.83% of the total volume. Oceania generated TWD910mn ($28.8mn), which represented 3.14% of the overall aggregate.

Europe underperformed. Combined profits there fell 6.67% y/y to TWD560mn ($17.7mn) from TWD600mn ($19.0mn) previously.