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September 30, 2020
Financial System and Bank Examination Department
Bank of Japan
The characteristics of the financial results of Japan's banks for fiscal 2019 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, although net income was supported by an increase in realized gains on bondholdings, it was pushed down by the continued shrinking of domestic lending margins. At major banks and shinkin banks, an increase in credit costs also pushed down net income.
Second, pre-provision net revenue (PPNR) (excluding trading income), which shows core profitability, was at its lowest level on the whole since the bursting of the bubble economy, continuing to decline at major banks and regional banks while increasing at shinkin banks. For all types of banks, PPNR (excluding trading income) continued to be pushed down mainly by the decline in loan-related income owing to shrinking domestic lending margins and by weak sales of investment trusts and insurance products. At shinkin banks, an increase in profits from investment trusts due to cancellations supported 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 on the whole.
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