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Banking on the Unknown: Japanese Lenders' Reliance on Deferred Tax Assets Jul 03
Standard & Poors, July 2003
Abstract
Financial results for fiscal 2002 (ended March 31 2003) revealed an increase in the ratio of deferred tax assets to capital at many Japanese banks. Some major banks and regional banks experienced further deterioration in the quality of their capital, with carryforward losses increasing and deferred tax assets rising to 99%-185% of capital. As Resona Bank Ltd.'s nationalization was triggered by an auditor's tightened assessment of its deferred tax assets, other banks may need to reevaluate their optimistic evaluation of future taxable income. Standard & Poor's ratings already incorporate the weakness of tax effect accounting, and a tightened assessment policy leading to a reduction in the amount of deferred tax assets would not necessarily lead to an immediate rating revision....
Companies mentioned in this report are: Deutsche Bank AG,Dresdner Bank AG,JPMorgan Chase Bank N.A.,UFJ Bank Ltd.,Sumitomo Mitsui Trust Bank Ltd.,Bank of Tokyo-Mitsubishi Ltd. ,UBS AG,Chuo Mitsui Trust & Banking Co. Ltd.,Sumitomo Mitsui Banking Corp.,Resona Bank Ltd.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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