The US-based ratings agency, Moody’s Investor Service, published a latest report on the impact of the BOJ’s negative interest rate policy on the Japanese banking sector.
Moody's has carried out both a bottom-up analysis and a top-down analysis to assess the impact of NIRP on the profitability of Japanese banks.
“Japanese banks will see only a limited deterioration in their profitability following the introduction of a negative interest rate policy (NIRP) by the Bank of Japan (BOJ) in late January, and the subsequent introduction of a so-called yield curve control policy in September.”
“The greatest impact on profitability from NIRP is through spread loans, with the regional banks more exposed due to their limited geographic diversification and high reliance on domestic interest-earning income.”
"The impact of NIRP on deposits at the BOJ has been limited, and the banks currently still earn interest on approximately 70% of these deposits."