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September 27, 2019
Financial System and Bank Examination Department
Bank of Japan
The characteristics of the financial results of Japan's banks for fiscal 2018 are summarized in the three paragraphs below.
First, net income decreased for all types of banks: major banks, regional banks, and shinkin banks. For all types of banks, net income was pushed down mainly by the continued shrinking of domestic lending margins and the upward turn in credit costs.
Second, pre-provision net revenue (PPNR) (excluding trading income), which shows core profitability, continued to follow a declining trend for all types of banks, while that for shinkin banks, which was at the lowest level since the bursting of the bubble economy, increased slightly. PPNR (excluding trading income) was pushed down by declines both in loan-related net interest income owing to shrinking domestic lending margins and in net non-interest income mainly due to weak sales of investment trusts. A decline in securities-related income at regional banks also pushed down their PPNR (excluding trading income).
Third, the capital adequacy ratios of financial institutions have been sufficiently above the regulatory requirements, although they have declined moderately.
This Report basically uses data available as at March 31, 2019.
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