Major Japanese banks are finally set to bid farewell to the bad-loan problems that have dragged down the country's financial sector, not to mention the economy as a whole.

Analysts maintain, however, that the issue of boosting banking profitability remains problematic.

During the first half of fiscal 2004, three out of the four mega-banking groups -- Mizuho Financial Group Inc., Mitsubishi Tokyo Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. -- cleared a government-mandated target of halving their ratio of nonperforming loans to total loans from fiscal 2002 levels.