The Bank of Japan has warned the excessive number of bank employees and branches has led to intensified competition among banks and resulted in a decline in profitability.

Deteriorating bank profitability is a common phenomenon in most advanced economies, as the prolonged ultra-loose monetary policy has squeezed net interest margins. Yet, the BoJ says the low profitability of Japanese banks is “striking from an international perspective”.

In its semi-annual financial system report, published