[Provisional Translation]
Financial Services Agency
February 7, 2003

The Status of Non Performing Loans as of end-September 2002

1. Non Performing Loans (NPLs) defined under the Financial Reconstruction Law (FRL)

The outstanding amount of all banks' NPLs defined under the FRL as of end-September 2002, is 40.1 trillion yen. The figure decreased by 3.1 trillion yen comparing with 43.2 trillion yen as of end-March 2002.

The ''special attention'' loans, whose risks are relatively lower within the total NPLs, have increased by 0.3 trillion yen. This reflects not only newly emerged ''special attention'' loans due mainly to an aggravation of business conditions of borrowers under the severe economic circumstances, but also an increase of upward migration of loans that belonged to ''doubtful'' or its lower categories in the previous period (end-March 2002). The upward migration reflects a progress in rehabilitation-type disposals of the NPLs. On the other hand, the increase which can be attributable to banks' stricter application of classification criteria for restructured loans, has shown a dramatic decrease.

The ''doubtful'' and ''bankrupt/de facto bankrupt'' loans, which entail relatively higher risks within the total NPLs, have decreased by 3.4 trillion yen, reflecting an aggressive removal of these assets from balance sheets of banks. The amount of the removed assets has exceeded that of newly emerged assets as a result of the aggravation of borrowers' business conditions.

[Table] Factors of changes in NPLs based on the FRL as of end-September 2002

(In trillions of yen, changes from end-March 2002)

2. Specific Allowance for Loan Losses

The outstanding amount of specific allowance for loan losses as of end-September 2002, is 7.2 trillion yen, a decrease by 0.7 trillion yen from 7.9 trillion as of end-March, 2002. This reflects a decrease of ''doubtful'' and ''bankrupt/de facto bankrupt'' loans based on the FRL, for which specific allowances are required. The decrease of these assets occurred mainly on ''doubtful'' loans, reflecting the aggressive removal of these assets from balance sheets of banks.

3. Total Losses on Disposal of NPLs

The total losses on disposal of NPLs during the first half of FY2002 (April-September, 2002), are 1.8 trillion yen, a decrease of 1.1 trillion yen comparing with the same period of the previous year (FY2001).

Table-1	The Status of Non-Performing Loans held by all banks(as of end-September 2002) (PDF format)
Table-2	The Status of Non-Performing Loans (NPLs) of All Banks based on the Financial Reconstruction Law (PDF format)
Table-3	Transition of Non-Performing Loans (NPLs) based on the Financial Reconstruction Law (PDF format)
Table-4	Total Losses on Disposal of Non-Performing Loans of All Banks (PDF format)
(Reference)	The Status of Risk Management Loans of All Banks (as of end-September 2002) (PDF format)

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(Reference)

• Comparison of Asset Classifications
• Definition of Each Asset Category under the Financial Reconstruction Law
• Definition of Risk Management Loan
• Assets & Borrower Classification Standard by Self Assessment