Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, August 3, 2010, from 8:43 a.m. to 8:46 a.m.)

[Opening Remarks by Minister Jimi]

I have nothing in particular to report to you today.

[Questions & Answers]

Q.

The contrasting financial results of major banks and securities companies, all of which became available to the public by the end of last week, seem to have been attributable to trends in the bond and stock markets. What are your views on their results?

A.

As you just mentioned, many major banks posted a substantial increase in earnings for the April-June quarter. The financial results of all major banks and other financial institutions for the quarter ended June 30, 2010 became available to the public by last Friday, on July 30. As pointed out just now, the financial results of major banks for the quarter ended June 30 released to the public recently revealed that their gross financial margin-which, as you know, is the profit margin-decreased, whereas market-related revenue such as proceeds from selling and purchasing of government bonds and other such financial instruments increased, while service revenue such as sales commission of investment trusts recovered. In addition, credit-related expenses decreased, as relatively few large-scale corporate bankruptcies during the April-June quarter brought about the decrease in the allowance for doubtful accounts, write-offs and so forth. I believe these factors made a positive contribution, and by and large, resulted in an increase in net income on a year-on-year basis.

The Financial Services Agency (FSA) will continue to keep a close eye on the status of management of banks.

On the other hand, as for the contrasting financial results of securities companies just suggested by the interviewer, I am aware that many domestic securities companies and groups reported a year-on-year decrease in earnings or a loss for the quarter from April to June 2010.

As the regulatory authority, the FSA is not in the position to comment on each and every securities company and group on an individual basis, but generally speaking, the earnings environment for securities companies and groups has not necessarily been favorable as a whole, given the recent sluggish stock trading volume, in addition to the limited number of large-scale securities underwriting opportunities, IPO (initial public offerings), M&A(mergers and acquisitions) and so forth, notwithstanding the strong influx of funds into investment trusts. This seems to have resulted in the contrasting financial results of banks and securities companies.

Thank you for listening.

(End)