As I mentioned earlier, the improvements in Japan’s economic activity and prices have had a positive impact on financial institutions’ business, for example through the reduction in credit costs. Moreover, bank lending has been increasing, albeit moderately. However, as financial institutions’ profit margin has not improved, financial institutions’ profits remain under strong downward pressure. The fundamental cause is the protracted deflation in Japan.
5 European Central Bank (2014), “Micro- versus Macro-prudential supervision: potential differences, tensions and  complementarities”, Financial Stability Review – Special Feature C, May 2014. 6 European Central Bank Banking Supervision (2018), Statement on SSM risk appetite, 9 December, available at 3/4  BIS central bankers' speeches  www.bankingsupervision.europa.eu/about/mission-statement/risk_ap...  4/4  BIS central bankers' speeches