Chart of the Week: Two risks haunting Japanese banks' balance sheets

Banks face maturity and higher interest risks.

According to Natixis Research, Japanese banks’ balance sheets are exposed to various risks. Firstly, banks are facing maturity risks. Overseas loans accounted 54% of overall investments, which has shot the loan to deposit ratio to 1.87 in January 2016, well over the critical point of 1.00.

"Other than maturity risk, the interest rate risk is also a sheer size of the overseas security investments of Japanese banks (nearly 24% of overseas assets). The BoJ’s Financial Stability Report in October pointed out that Japanese banks are exposed to higher interest risks."