Negative rates put more pressure on Japanese banks' nets interest margin - Fitch

The latest Fitch report highlights impact of Japan’s negative interest rates policy on the country’s banking system.

Key Findings from the report:

Negative interest rates put more pressure on Japanese banks' nets interest margin (NIM)

Short-term direct impact is limited as the negative interest rate is applied only to additional funds placed at the BOJ

Impact of negative interest rates on mega banks to be neutral, with the impact being greater for the smaller, unrated banks

Negative rating implications may stem from other factors, such as failure of Abenomics, worse-than-expected deterioration in the global economy

In the medium to longer term, lower reinvestment yield on assets will lead to net interest margins erosion