For example, if the profitability of housing loans during the life of a loan that was lent in fiscal 2003 and fiscal 2007 is compared on a present value basis, it will decline by about six percentage points. If the default rates rise significantly in the future, it cannot be denied that banks’ profits will plunge.
The profitability of housing loans also warrants careful monitoring. In addition, consumer loans such as card loans and car loans are an area where potential needs exist over time. With a view to its potential, the major banks have been increasing their capital subscription to consumer credit, credit card, and consumer finance companies.