TAIPEI (Taiwan News) — Taiwanese banks are expanding operations in Hong Kong despite the city’s political, economic, and real estate challenges.

Hong Kong remains the most profitable banking center for Taiwanese lenders, per a Nikkei Asia report Thursday. It is seen as both a gateway to international markets and a bridge between Asia and the West, despite rising China tensions.

Taiwanese banks first entered Hong Kong in the 1980s, and even after Beijing imposed its National Security Law in 2020 they have continued to post strong profits.

Nikkei reported that Taiwanese banks earned NT$21.5 billion (US$700 million) in pre-tax profits in the first half of the year, accounting for 45% of their overseas profits — far more than hubs such as Singapore, London, or Wall Street.

Fubon Financial Holdings’ Hong Kong subsidiary reported HK$714 million (NT$2.8 billion, US$91 million) in profit in the first half, a 61.3% increase over the same period in 2024. Cathay United Bank also announced plans to expand its operations in Causeway Bay to meet demand.

While banks have profited in Hong Kong, they have reduced exposure to the Chinese mainland in recent years amid geopolitical tensions and tighter government scrutiny of cross-strait financial activity, according to AmCham.

Nikkei added that Taiwanese banks cut China exposure from about 70% of equity in 2014 to just under 30% in 2022, following the relocation of Taiwan businesses from China to Southeast Asia under former President Tsai Ing-wen’s (蔡英文) New Southbound Policy.