In the current economic climate, banks should not only lend money to client companies but also support them in ways to make them more eager to expand existing operations or launch new businesses, Johnan Shinkin Bank chief Tsuyoshi Yoshiwara said in a recent interview.
The Bank of Japan’s bold monetary easing policy aimed at overcoming deflation will be beneficial in the long term, although it is expected to squeeze commercial banks’ interest revenue in the short term, he said.
Yoshiwara said business sentiment is improving thanks to the yen’s weakening and rises of stock prices, but it will take time before his bank sees any marked increase in lending.
Although Japan now seems to be shifting from deflation to inflation, companies aren’t ready to borrow money because they don’t know what they should do at this critical juncture, Yoshiwara said.
“What banks should do now is not to ask clients to borrow money at low interest rates but to support them so that they can, for example, expand sales networks and launch new operations,” he said.
Johnan Shinkin, the second-largest “shinkin” (credit bank) regional credit association, is ready to make proposals that will lead to clients’ future development, Yoshiwara said.
On the new growth strategy to be compiled by the government, Yoshiwara said that all nuclear power generation should be stopped immediately and the nation’s electricity generating and supply business be fully liberalized.
“New energy sources will help create business opportunities,” he said, pointing out that many small and midsize companies manufacturing energy-related equipment are major clients for shinkin.
Johnan Shinkin operates in Tokyo and Kanagawa Prefecture. As of the end of March last year it had a total of 85 branches. At the same time, the bank’s balance of lending stood at a little less than ¥2 trillion.
New banks see profits
Eight of Japan’s nine newest banks, including online institutions, enjoyed net profit growth or returned to the black in fiscal 2012, which ended in March, thanks mainly to growth in loans, according to their latest earnings reports.
Seven Bank saw its net profit increase for the second straight year thanks to higher commission revenue as it installed more automated teller machines than planned in the latest business year.
Daiwa Next Bank and Jibun Bank saw their bottom lines move into the black for the first time, while Japan Net Bank reported a profit increase for the first time in three years.
The lending balances at the three banks increased, leading to higher interest revenue and the rosy bottom-line performances.
Rakuten Bank, Orix Bank and Sony Bank all logged net profit increases for the fourth consecutive year.
Aeon Bank, which moved into profitability during fiscal 2011, secured a net profit rise in the latest year on housing loan business growth.
Meanwhile, SBI Sumishin Net Bank suffered a year-on-year decline in net profit because it started to pay corporate tax.
However, the bank said its pretax profit grew in the year and that its net profit is expected to rise in fiscal 2013.