Over 70 Pct of Japan Regional Banks Suffer Bottom-Line Deterioration
Tokyo, May 18 (Jiji Press)--More than 70 pct of exchange-listed regional banks in Japan suffered year-on-year net profit drops or net losses for fiscal 2019, hit by the spread of the novel coronavirus in addition to prolonged low interest rates, Mitsubishi UFJ Morgan Stanley Securities Co. said Monday.
According to a tally by the brokerage house, 53 of 76 publicly traded regional banks that had released their earnings reports for the year that ended in March logged falls in their group net profits, while three--Michinoku Bank <8350>, Shimizu Bank <8364> and Shimane Bank <7150>--posted red ink.
Net profits at banks in the black tumbled 10.4 pct from the year before to a combined 764 billion yen. The total lending costs, such as on loss reserves and bad loan disposals, soared by some 70 pct excluding the figure at Suruga Bank <8358>, which had to set aside huge reserves for losses on improperly extended loans.
The banks surveyed saw their net interest income, or profits on lending and investment in equities and other securities, fall 4.1 pct under the low-interest-rate environment created by the Bank of Japan's prolonged massive easing and in response to sluggish stock prices amid the coronavirus crisis.
But they managed to report a 4.1 pct rise in their net profits from core banking operations, to 1,202.3 billion yen, as gains from bond sale and enhanced cost-cutting efforts more than offset the net interest income decline.
[Copyright The Jiji Press, Ltd.]