TOKYO: Many Japanese regional banks are poised to exceed their first-half profit forecasts after strong results in the first quarter, thanks to declining bad-loan costs.
More than half of the 84 local banks listed on the Tokyo Stock Exchange had made at least 80 percent progress toward their first-half net income goals after the three months ended June 30, according to data compiled by Bloomberg.
Bank earnings are being boosted by record-low credit costs as fewer companies file for bankruptcy even as Japan’s economic recovery loses steam. Just 632 firms went out of business in August, the fewest in almost 25 years, Tokyo Shoko Research Ltd. figures show. That’s helping to offset lower income from lending as competition and low interest rates squeeze margins.
“I think we can expect to see more upward revisions,” said Masahiko Sato, a Tokyo-based bank analyst at SMBC Nikko Securities Inc., citing a requirement in Japan for companies to revise their profit targets if expected results deviate from their forecasts by at least 30 percent. “But we’ll need to monitor the impact if the current economic slowdown continues.”
