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September 26, 2016
Financial System and Bank Examination Department
Bank of Japan
The characteristics of the financial results of Japan's banks for fiscal 2015 are summarized as follows.
First, net income remained at high levels for all types of banks: major banks, regional banks, and shinkin banks. Although net interest income and net non-interest income decreased, realized gains from sales of securities such as domestic and foreign bonds, ETFs, equity investment trusts, and strategic stockholdings, and institutional factors including the deposit insurance premium rate cut contributed to a rise in profits.
Second, operating profits from core business, which show core profitability, decreased for all types of banks. Factors behind this included a reduction in interest rate spreads on domestic loans, a decline in fees and commissions associated with sales of financial instruments such as investment trusts, and a decrease in major banks' net interest income from the international business sector, mainly due to a rise in foreign currency funding costs.
Third, financial institutions have maintained their financial soundness. Credit costs still remained low at major banks, albeit with a slight increase, mainly in overseas exposure to the commodity sector, and continued to decline at regional banks. In addition, the amount of capital increased, mainly at major banks, due to the accumulation of retained earnings.
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