Taiwan's artificial intelligence (AI) boom is reshaping the financial sector, rewarding firms tied to capital markets and corporate expansion while exposing weaker players to fallout from China’s slowdown and persistent weakness in traditional industries, with the gap expected to widen through this year, Taiwan Ratings Corp said in its midyear credit outlook. Securities firms are expected to be the biggest beneficiaries, as Taiwan’s benchmark stock index has climbed above 45,000 points, driving record trading volumes and a surge in initial public offerings, pushing the industry’s return on average assets to a projected range of 3.6 percent to 4.6 percent this year. However, rising margin financing and unsecured lending have pushed leverage levels at some brokerages close to regulatory limits. Banks are benefiting from strong demand for corporate foreign-currency loans, expected to drive overall loan growth of 8 to 9 percent this year, with sector-wide return on average assets forecast at about 0.8 percent. Life insurers are seeing stronger growth, with premium income forecast to rise 8 to 10 percent this year, supported by demand for health insurance and participating policies, though currency exposure remains a key vulnerability. Leasing companies serving traditional industries are likely to face growing pressure.