The aggregated net profits of the nation’s six major banking groups have reached a record 1.73 trillion yen for the April-September half-year period, with four of the groups realizing record profits. A special factor contributed to the soaring profits. Brighter business performances among their borrowers has made it unnecessary to maintain reserves for credit losses to deal with nonperforming loans and enabled the banks to count the reserves as profits. But it must be kept in mind that none of the major banks is paying corporate taxes since they have carried-over losses. Losses can be carried over for up to seven years — a measure to encourage disposal of nonperforming loans. Companies are exempt from paying corporate taxes if their losses exceed their profits.

These factors have increased the major banks’ profits. Sumitomo Trust & Banking Co. will start paying corporate taxes next year because it no longer has carried-over losses. Other banks are expected to take a few more years to start paying.

Since the major banks have realized big profits while not paying corporate taxes, it is logical that consumers expect better services. But these expectations will largely go unmet.

Five of the six major banking groups will increase dividend payments to shareholders to try to catch up with the payout ratios of banks in other developed countries. Although, generally speaking, service fees charged by banks are still high, there is some good news. Sumitomo Mitsui Banking Corp. will start reducing some transfer fees in December. From March, the Bank of Tokyo-Mitsubishi UFJ will eliminate service fees from 8:45 a.m. to 6 p.m. on weekdays for ATM users at convenience stores.

Yet some bank groups are reported poised to resume political donations this year. If they do, many people will conclude that they are more interested in cultivating political ties than in increasing customer benefits.

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