The nation's six major banking groups have posted record consolidated net profits of 3.12 trillion yen for the business year ended March 31 -- 4.3 times more than for the previous year and the highest in 17 years. This nearly doubles the previous record of 1.7 trillion yen logged by major banks in fiscal year 1988 during the asset-inflated bubble economy.
But their good performance is attributed largely to one-time gains. The banks need to make long-term efforts to improve their profitability so that they can return part of their profits to depositors who have been suffering from rock-bottom interest rates for years. Otherwise, depositors' dissatisfaction with banks will only increase.
The latest performance is a sea change from the situation prevailing several years ago. To cope with a financial system crisis, the Bank of Japan, in March 2001, introduced an ultraloose monetary policy under which the central bank flooded the banking system with excess liquidity while keeping short-term interest rates at almost zero percent. Trying to tide over capital shortages, some major banks were experiencing such a hard time that they even borrowed money from companies to which they had extended loans.