Bank consolidation to increase profitability

Fund managers are remaining cautious over the future of Japanese banks. Many are underweight in the sector or, in extreme cases, have a zero weighting in bank stocks, even though the Topix Banks sub-index has risen by 59% to the year. During the same period the Topix Index has increased by 35%. The rise of banking stocks is partly due to the consolidation activity taking place in the sector Although it is expected that consolidation activity will enable banks in the future to reduce costs, the sector still carries the heavy burden of bad debt. This problem has intensified with falling prop...