Sixteen of the nation’s top 17 banks had a total of 20.03 trillion yen in bad loans at the end of fiscal 1998, according to earnings reports released by Monday.
The tally of nonperforming loans excludes those held by Daiwa Bank, which will release its report today.
All of the 16 logged pretax losses for fiscal 1998, which ended March 31. Sakura Bank incurred the biggest loss among the banks with 754.2 billion yen, while the Bank of Tokyo-Mitsubishi posted the smallest loss of 22.3 billion yen.
The banks, which beefed up their capital bases through injections of public funds in March, disposed of a total of 10.06 trillion yen in bad loans in fiscal 1998.
Bad loan disposal includes the putting up of loss reserves for risky loans and selling off of collateralized properties to settle losses.
The amount of disposal ranged from 87.1 billion yen for Nippon Trust & Banking Co. to 1.07 trillion yen for Sumitomo Bank.
Officials of the banks stressed that they have completed their disposal of sour loans in fiscal 1998. They expect to spend much less money to cover their nonperforming loans during the current business year, which ends next March.
For example, the Industrial Bank of Japan, which wrote off some 924 billion yen in bad loans in fiscal 1998, said it plans to spend only 40 billion yen this year. Likewise, Sakura Bank, which disposed of bad loans worth 1.02 trillion yen in fiscal 1998, plans to fork out 100 billion yen this year.
All of the banks benefited immensely from the so-called tax effect, which the banks introduced for the first time.
Under the new accounting rules, banks can count anticipated partial returns of their corporate taxes into their books, even though they will not actually have the money returned until years after the payment.
Dai-Ichi Kangyo Bank reported the largest tax effect among the banks at 732.6 billion yen. Nippon Trust & Banking Co., the smallest trust bank, also logged 20 billion yen, even though the bank suffered pretax losses for the fifth consecutive year.