The balance of nonperforming loans held by the nation’s financial institutions came to 27.9 trillion yen as of the end of March, with 4.68 trillion yen estimated requiring disposal as losses, according to Finance Ministry figures released July 4.

The total amount is down 19.8 percent from 34.79 trillion yen logged a year before. Nonperforming loans include loans to bankrupt borrowers, restructuring loans and loans in which interest payments have been in arrears for six months or more. Ministry officials said that although financial firms raked in combined operating profits of 8.22 trillion yen for the year that ended in March, the sour loan buildup was at levels financiers could handle.

Of the 27.9 trillion yen, 12.34 trillion yen has already been set aside in special accounts for loan-loss reserves, down 1.5 percent from March 1996, the Finance Ministry said. However, the figures showed that the level of bad loan burden is becoming increasingly diversified among various financial institutions.

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