Press Conference by the Minister for Financial Services

(Excerpt)

May 25 , 2004

Q.

The financial results of major banks announced yesterday indicate that the ratio of non-performing loans has been steadily decreasing. As this is one of the important targets set by the government, what are your views on this?

A.

As pointed out, when the policy target to reduce the ratio of non-performing loans to the level somewhere between 4-5% by next March was declared, many people suggested that it would be extremely difficult to realize. But at this rate, we would probably be able to achieve the target half a year ahead of schedule. We will make further efforts steadily towards achieving the policy target.

Q.

According to the banks' financial results, there are now prospects that the ratio of non-performing loans will decrease to the level somewhere between 4-5% by next March, but how are the improvements in profitability appreciated?

A.

One of the important aspects of the latest financial results is that the costs of disposal of non-performing loans as a whole were clearly less than their net income. Therefore, the disposal of non-performing loans in itself will be an extremely important step towards improving profitability. Based on this, it is hoped that banks will make further efforts in ''selection and concentration'', by taking advantage of their respective competitive strengths.