Jan.04.2005

Japanese Bankers Association

New Year's Address from the Chairman

The banking industry is in the last stage of solving the bad loan problem, and is entering the next stage where they will proactively offer distinct high-quality financial services utilizing creative skill of each bank.

Within this environment, we will tackle the following tasks.

The first task is to accelerate steps to improve the balance sheets and enhance profitability while adopting a more sophisticated risk control method, to improve the solidity and reliability of the financial system.

Thanks to progress in disposing of bad loans, evaluation of the soundness of the Japanese financial system has steadily improved. It, however, is essential that we realize a more sophisticated risk control method, which includes complying with the new BIS Accord, to prevent the generation of new problem loans and enable stable, strategic management.

It is also essential that we gain true confidence from their customers in the areas of further strengthening compliance systems, endeavoring to securely handle customer information and enhancing the security of each institution's numerous systems. In addition to the efforts of each individual bank, Zenginkyo will take appropriate measures in this regard.

The second task is to proactively provide high-quality financial products and services that meet customer needs, while promoting deregulation and laying the groundwork for a competitive environment.

In recent years, financial institutions have intensified their efforts for providing financial services with higher added-value, by actively entering new lines of business and scrapping old business models. As extra incentive in these efforts, the issuing of new policies and measures by government is necessary, including deregulating the sale of insurance products by banks and banking agencies.

As to the laying of the groundwork for a competitive environment, it is essential to ensure fair competition. In this sense, reforms that truly solve problems must be realized with regard to the privatization of Japan Post and the blueprint for doing so is now being discussed. The reviewing of policy finance, including the Housing Loan Corporation, is also essential.

The Japanese economy is beginning to take steady steps forward thanks to diligence by both the government and private sector. This year is very important for promoting reforms and attaining sustainable economic growth. Banks will keep their eyes on customers' needs and remain committed to providing financial products and services with higher added-value.