Regional financial institutions in particular have lower gross operating profits per employee than U.S. and European financial institutions of a similar size.
Such low profitability is due not only to Japanese financial institutions' low net interest income that is susceptible to interest rate developments but also to low net non-interest income that is not susceptible to these developments.8 Since the 2000s, Japanese financial institutions have been making efforts to expand their fee and commission-based business with the aim of diversifying their profit sources, but the share of net non-interest income in gross operating profits (the net non-interest income  7  Based on a stock yield model, the equation "P/B ratio = ROE (return on equity) / COE (cost of equity)" can be obtained after simplification.