It appears that most of Japan's top banks are making good progress toward cleaning up their nonperforming loans. They may not be out of the woods yet, but their latest financial reports indicate that they are on track to meeting a government target for bad-debt reduction in fiscal 2004, which ends March 31, 2005.
For fiscal 2003, three megabanks -- Mitsubishi Tokyo Financial Group (MTFG), Sumitomo Mitsui Banking Corp. (SMBC) and Mizuho Holdings -- posted profits, reversing the losses they had incurred the year before. However, one group, UFJ Holdings, remained in deficit. So did Resona Holdings, which is undergoing reconstruction following last year's government bailout.
Thus, the top banks are divided into winners and losers, reflecting a polarized pattern of the nation's economic recovery. The economy expanded robustly in fiscal 2003 as manufacturers -- including makers of autos and electrical machinery and steel producers -- providing the main thrust of growth.