Japan’s bankers pocketbooks hit by negative rates
Not only companies feel the pressure from the negative interest rates of the Bank of Japan; their staff are also.
The latest data compiled by a private company called Tokyo Shoko Research shows that average wages in the construction industry are now 16 per cent higher than the salaries of banking and insurance employees, with the gulf widening as pay falls for bankers.
Since 2016, when the BOJ introduced negative rates, the average wage at 102 listed banks and insurance companies had edged down by 1.4 per cent, making the industry the worst performer among ten surveyed in a report released Monday. Pay at all study businesses rose by 2.9% over the same era.
The figures are another indication that partly attributable to the negative interest rate policy of the BOJ, pressure on bank profits is forcing financial institutions to keep a tight cloak on costs. One cause why the central treasury is unwilling to contribute to its already colossal strengthening program unless needed is to put more stress on loan profitability.
According to a BOJ study last week, profits in all kinds of companies from loan unions to megabanks dropped in the fiscal year finished in March. Gov. Haruhiko Kuroda has promised to monitor closely the side effects of relaxation on funds as he proceeds with the incentive to attain an inflation target of 2 per cent.
While Kuroda has recognised that ultralow prices hurt profitability in commercial banks, he has also flagged the effect of ageing and shrinking population and a declining amount of regional-based firms, in specific, on local bank revenues.
Because of next year’s Olympic Games and a growing amount of international visitors, the average salary in the building industry has risen 8.7 per cent to 7.49 million yen since 2015, the study indicates.