More than half of 78 listed Japanese regional banking groups and banks saw a decline in their net profits or incurred red ink in the April-December period, hit by the coronavirus pandemic, an analysis of their earnings reports showed Saturday.
Also affected by the Bank of Japan's ultraeasy monetary policy, resulting in low lending interest rates, their combined net profit fell 18.4 percent to 603.3 billion yen ($5.75 billion) in the nine months from a year earlier, the analysis showed.
The central bank is maintaining short-term rates at minus 0.1 percent while guiding long-term rates at around zero percent in a bid to achieve its 2 percent inflation target. The government is also supporting companies reeling from the pandemic by providing them with interest-free loans without collateral.
In 2020, the number of corporate bankruptcies in Japan fell to the lowest in 31 years, thanks to the government's financial assistance.
"Bad-loan disposal costs were not incurred as often (as some had expected), given the bad business sentiment," an executive of a major regional bank said.
Of the 78 lenders, 38 including Fukuoka Financial Group Inc., which runs three regional banks in southwestern Japan, and Bank of Kochi in western Japan, saw their net profits decrease, as they had to scale down sales activities following the outbreak of the virus.
Jimoto Holdings Inc., which operates two regional banks, and Fukushima Bank, both in northeastern Japan, logged red ink due to losses resulting from their poor investments.
Meanwhile, 36 regional lenders such as Tsukuba Bank and Fukui Bank saw an increase in their net profits, while Michinoku Bank and Shimane Bank swung back in the black.
The combined net profit of the 78 banks for the current fiscal year through March is expected to drop 14.7 percent to 630.1 billion yen. Among the banks, 49 said their net profit is likely to decline, while two said they are expected to fall into the red.