Some 60% of 102 regional banks in Japan posted profit falls or net losses in April-September, according to their latest business results.
The banks suffered ballooning credit costs to prepare for loan losses as many clients took a beating from the novel coronavirus crisis.
If the epidemic expands again and worsens business conditions at local companies, regional banks are expected to see their business performance deteriorate even further.
The 102 banks posted a combined parent-only net profit of ¥399.3 billion for the first half of fiscal 2020, down 11.4% from a year before.
Sixty of them posted net losses or saw their net profits slide. It is the first time since 2012 that regional banks' combined first-half net profit has fallen below ¥400 billion.
Those that incurred losses include Hyakujushi Bank, Kirayaka Bank, Fukushima Bank, Higashi-Nippon Bank and Tokyo Star Bank.
Combined credit costs at the 102 banks grew 26.8%.
However, Hisashi Shibata, president of Shizuoka Bank, said the costs were smaller than expected at his bank.
"We initially expected ¥7 billion in first-half credit costs, but the result was ¥2 billion," he said.
The outcome apparently reflected financing aid and other coronavirus relief measures by the government and the Bank of Japan, which helped prevent bankruptcies.
But regional banks cannot afford to let their guard down as the end to the coronavirus epidemic remains out of sight.
Combined net interest incomes stood almost unchanged at ¥1.77 trillion as many banks focused on effectively interest-free, unsecured loans.
Meanwhile, net core business profits sank 3.8% to ¥625.3 billion because financial product sales were suspended during the coronavirus state of emergency earlier this year.
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