Financial Results of Japan's Banks for Fiscal 2025

In fiscal year 2025, Japan's banks experienced a notable shift in their financial results. Major financial groups and regional banks saw an increase in net income, while shinkin banks experienced a decrease. This was driven by several key factors. Firstly, pre-provision net revenue (PPNR) excluding profits/losses from investment trusts due to cancellations, which is a measure of core profitability, improved for all types of banks.

This was a result of higher pre-provision net revenue and gains/losses on stockholdings. However, losses on bond sales, driven by rising interest rates against the yen, put downward pressure on net income.

Secondly, PPNR excluding profits/losses from investment trusts due to cancellations showed an upward trend for all types of banks. This was chiefly attributed to a rise in net interest income, due to higher interest rates against the yen, and an increase in net non-interest income.

Thirdly, the capital adequacy ratios, which are a measure of a bank's financial strength, increased for domestic banks. However, for internationally active banks, these ratios declined. Despite this, all types of banks maintained capital adequacy ratios that were sufficiently above the regulatory requirements.

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