The projected amount of loan-loss charges by major Japanese banks for this business year will probably stay within the size of operating profits, Financial Services Minister Hakuo Yanagisawa said Tuesday.
"You don't have to think the amount of charges will surpass that of operating profits," Yanagisawa said in reference to earnings forecasts released by 13 major banks last week.
The 13 banks expect to book a combined 2.5 trillion yen in loan-loss charges for the year to March 31, down sharply from 7.7 trillion yen last year.
Many analysts say the projections are too optimistic.
Yanagisawa said the amount of bad-loan disposals will probably not go beyond that of operating profits if the economy finds its way to a recovery path.
The 2.5 trillion yen in credit costs would be less than the combined operating profits of 3.72 trillion yen projected by the banks for the current business year.
But it is uncertain if the banks' loan-loss charges will fall substantially, as banks could be saddled with fresh bad loans if the economy deteriorates and stock prices fall, the analysts said.