The bank profits are mainly sourced from the interest margin between the deposit and loan, commission income from handling charges, income from investment and others with the income from loan being the main business item of a traditional bank. To survive in a severely competitive environment, bankers have to strengthen the non-traditional business development and business diversification. This paper takes 15 non-financial holding banks and 15 financial holding Banks in Taiwan as the objects of study, and explores the relationship between the diversification degree and profitability of the banks in Taiwan. The results show that during the research period, the ROA (Return on Assets), ROE (Return on Equity) and EPS (Earnings per Share) of the non-financial holding banks of high-degree diversification is superior to that of the non-financial holding banks of low-degree diversification; however, the ROA, ROE and EPS of the financial holding banks of high-degree diversification is not superior to that of the financial holding banks of low-degree diversification mostly. Therefore, to increase profitability, the non-financial holding banks not only need to improve the service process to increase the satisfaction, but also develop all businesses towards diversification, thus able to enhance the bank value and create the maximum profit.