This report analyzes the Japanese banking industry taking into account the health of the economy and the sustainability of this industry in the present scenario. The report analyzes the factors driving change in the industry and also assesses the competitive landscape of city banks and regional banks, the two major types of banks that control more than 60% of the assets in the Japanese banking industry. The trends and and key issues are showcased to develop an outlook for this rapidly-transforming industry.
Japanese banks have posted net losses from the mid-1990s due to substantial increase in credit costs. However, the overall banking industry recorded positive net income in 2004. To achieve global competitiveness, Japanese banks still need to improve their profitability. Declining interest rates is a major issue facing this industry.
By 2007, about 30 Japanese banks are expected to re-evaluate their lending policy in the light of new capital adequacy standards to be issued by the Bank for International Settlements.
