Standard & Poor's Corp. said Monday it will not revise its ratings on most of Japan's major banks in response to sharp declines in their share prices.
But this excludes the short-term ratings on UFJ group banks, it said. Earlier in the day, S&P placed on credit watch with negative implications the group under UFJ Holdings Ltd. due to growing concerns over the group's liquidity risks.
The U.S. rating agency said the share prices of the banks have fallen at a faster pace than the benchmark Nikkei average of 225 selected issues on the Tokyo Stock Exchange.
However, the deterioration in the major banks' financial standings has not been greater than S&P expected, and the agency said it does not expect the major banks' financial results for the fiscal first half to Sept. 30 to be substantially different from their performance forecasts.
"Currently, we expect the banks' net operating profits to slightly surpass their initial forecasts and credit charges to stay within the banks' projections," Naoko Nemoto, a director at S&P's Tokyo office, said in a statement.
In the second half of the current fiscal year, credit charges are likely to increase substantially, because the government's financial reform plan requires more stringent evaluations of loan assets, the agency said.
Nevertheless, current ratings on the major banks incorporate the risk that credit losses will not be covered by profits and also incorporate potential government support.
"Ratings could be revised if the banks' financial profiles deteriorate further, due to falling stock prices affecting their large equities holdings, or if the banking industry and the government fail to swiftly implement effective measures to halt the slide in their performance," Nemoto said.