Japan negative rates to hit banks’ profits by 300b yen

Japan negative rates to hit banks’ profits by 300b yen

Business World

TOKYO: Japan’s financial watchdog estimates that negative interest rates under
the Bank of Japan’s (BoJ) monetary easing policy will reduce profits for the country’s three
big banks by at least 300 billion yen ($2.96 billion) for the year through March 2017 (Business World).

The Financial Services Agency (FSA) expressed concern to the BOJ regarding the situation
as it sees reduced profits weakening the banks’ ability to extend loans, news reports say.

According to FSA estimates, Mitsubishi UFJ Financial Group Inc’s profit will fall by 155 billion yen.
Sumitomo Mitsui Financial Group Inc’s profit will be reduced by as much as 76 billion yen and that
of Mizuho Financial Group Inc will be cut by 61 billion yen.

If the BOJ was to take interest rates deeper into negative terrain, the agency reckoned that the banks
would suffer substantial further drops in profit as their interest rate income would suffer.

The BOJ implemented negative interest rates in February in a bid to boost the economy, under
which it charges banks for parking some of their excess reserves at the central bank.

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