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September 21, 2018
Financial System and Bank Examination Department
Bank of Japan
The characteristics of the financial results of Japan's banks for fiscal 2017 are summarized in the three paragraphs below.
First, net income increased for major banks, while that for regional banks and shinkin banks showed a smaller decline than in the previous year. For all types of banks, factors such as the shrinking domestic lending margins and the increased losses on sales of U.S. Treasuries pushed down net income. On the other hand, net income was pushed up mainly by low credit costs and the increased gains from sales of stocks.
Second, pre-provision net revenue (PPNR) (excluding trading income), which show core profitability, were more or less unchanged from the previous year for regional banks, while they continued to decrease for major banks and shinkin banks. All types of banks saw a decline in net interest income through the shrinking domestic lending margins. Regional banks and shinkin banks, both of which are highly dependent on net interest income, have demonstrated increasing heterogeneity in core profitability among financial institutions.
Third, financial institutions have maintained their financial soundness on the whole. The amount of capital continued to increase mainly at major banks, due to the accumulation of retained earnings.
This Report basically uses data available as at March 31, 2018.
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