In its latest review on the Japanese banking sector, the US-based Fitch Ratings, the Japanese major banks’ profitability will remain under pressure due to structural challenges despite efforts to improve efficiency, as cited by Reuters.
Key Findings:
“Persistently low interest rates in Japan, a declining and aging population, changes in consumer expectations from financial services providers combined with rising uncertainties in the global economy are major headwinds.
Key to the banks’ medium-term outcomes is their capital strategy to build loss-absorption buffers commensurate with their risk appetite, and management’s ability to present and execute a sustainable strategy.
The major banks will maintain sound asset quality, although credit costs are likely to rise as the challenges continue to build. Stable liquidity and funding positions are supported by a sound franchise in the domestic market.”
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