Combined latent losses on shares held by Japan's 16 top banks will come to at least 2.49 trillion yen, almost matching the banks' annual operating profits, if the Nikkei Stock Average sags to 12,500, according to a report by Moody's Investors Service Inc.
The U.S. credit-rating agency also says if a different set of presuppositions is applied, those losses could balloon to 4.8 trillion yen even at the same Nikkei index reading of 12,500, far eclipsing operating profits.
The 16 banks' operating profits came to 3.30 trillion yen in fiscal 1999, which ended March 31, 2000.
Operating profit is computed by adding profits from a bank's core businesses, such as lending and commissions. Taxes and loan-loss disposal costs, the hardest brake on a Japanese bank's profitability, are subtracted from this category of profit.