Most public fund-injected banks short of profit targets

September 6, 2017

TOKYO- Eight of the nine regional banks provided with public funds failed to achieve their fiscal 2016 profit targets due to prolonged superlow interest rates under the Bank of Japan's negative interest rate policy.

The Financial Services Agency is increasingly concerned because the lenders may become unable to repay the funds as scheduled if their performance continues to worsen, informed sources have said.

The nine are those that have received public fund injections since March 2009 under the revised law to strengthen financial functions. They submitted targets for net core banking business profits to the government agency when receiving the financial aid.

In the year ended in March this year, most of them managed to cut costs. But at eight banks, the cost-reducing efforts were not enough to cover a decline in revenues stemming from lower lending rates. Jiji Press