Standard & Poor's Corp. said Monday that the record-high number of bankruptcies and intensifying competition are threatening the profitability of Japan's consumer finance industry.
"A prime concern for the near term is the record levels of personal bankruptcy in Japan, with 139,281 recorded cases in 2000," the U.S. credit-rating agency said in a news release.
"Loan losses for the major consumer finance companies correlate closely with bankruptcy figures, which have increased steadily since fiscal 1995," it said.
Nonetheless, Japan's five major consumer finance companies -- Acom Co., Promise Co., Sanyo Shinpan Finance Co., Takefuji Corp., and Aiful Corp. -- have maintained high profitability due to an increase in average loan amounts, S&P said.
"The average loan amount per account for the top five companies for fiscal 2000 reached a record high of 520,000 yen," the agency said, noting that larger loan amounts allow companies to benefit from economies of scale with reduced costs per account.