Negative interest rates will make next year a difficult one for Japanese lenders, and the central bank should examine the impact of the policy before pushing them further below zero, the new head of the country's banking lobby said.
The Bank of Japan's decision to charge lenders on some of their reserves will generate positive effects for the industry in the long run if it pulls the country out of deflation, said Takeshi Kunibe, who starts his second stint as chairman of the Japanese Bankers Association on Friday. "But bank earnings will be negatively impacted in the short term."
Bank shares are the worst performers in Japan this year on concern that negative rates will further squeeze their interest income as well as impose costs for holding any extra funds that they don't lend to consumers and companies. Kunibe, 62, who is president of Sumitomo Mitsui Financial Group Inc.'s lending unit, said it's too early to tell whether the policy will lead to lower revenue and profit next year.