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Japan Press Service Co., Ltd. is the only news agency providing information of progressive, democratic movements in Japan

Mega banks net profits hit record high of 3 trillion yen

Japan's six major banking groups' net profits for the business year ending in March have hit a record high of about three trillion yen (27.8 billion dollars), up 420 percent from the previous year.
According to reports simultaneously released on March 23, the Mitsubishi UFJ Financial Group (MUFG) earned more than one trillion yen (9 billion dollars) for the first time and the Sumitomo Mitsui Financial Group (SMFG) also earned a record high of 687 billion yen (61 million dollars).

In the case of MUFG, reversal of loan-loss reserves amounting to 609 billion yen (5.4 billion dollars) made up a large portion of its profit.

Under the circumstances that the government has pressed banks to swiftly write off bad loans and improve earnings using tax money, the bottom-line-oriented business that these banks are putting into practice has brought about such huge profits.

Corporate streamlining that cuts the number of branches and employees also boosted their net profits. SMFG reduced the number of its branch offices to 412 in 2005 from 578 in 2001 and its employees to 21,000 from 27,000 in the same period.

While giving depositors a zero interest-rate, these banks charge customers with higher commission fees. The six financial groups as a whole increased their non-interest profits that include commission income from investment trusts among others.

Tying up with loan sharks, major banks have expanded personal loans and they also expanded sales of speculative financial products. In this period, SMFG received administrative punishment for its coercive sales of interest-rate swaps, which is regarded as the typical case of a profit-first policy.

"The Koizumi government's financial policy is responsible for the bank's sleazy behavior," says an expert.

Indignation is growing among pensioners in particular, and one retiree said, "I want these banks to give some of their enormous profits back to us small depositors."
- Akahata, May 24, 2006