BoJ: Financial institutions have sufficient capacity to absorb losses

The Bank of Japan (BoJ) said in a statement on Tuesday that “financial institutions have sufficient capacity to absorb losses.”

Additional takeaways

Smooth functioning of financial intermediation has been maintained even amid global changes in financial and economic conditions.

Major financial institutions have strengthened the profitability of their domestic deposit-taking and lending activities, taking into account rising Yen interest rates.

Regional financial institutions have improved the profitability of their domestic deposit-taking and lending activities due to rising yen interest rates.

Some financial institutions faced challenges in estimating the impact of interest rate hikes on their profitability.

Many financial institutions expected credit costs to remain more or less flat, though some recorded large credit losses related to financing for global business activities.

With regard to risk management, there were some cases where financial institutions had problems in assessing borrowers' financial and funding conditions.