Shoko Chukin Bank face high problem loans but profitability improving

The higher problem loans ratio may be due to its focus on the SME segment.

The Shoko Chukin Bank (SCB) faces higher-than-average problem loans but improving profitability on expanding net interest and fee income, Moody’s Ratings said.

The Japanese bank’s problem loans/gross loans ratio was 3.9% as of March 2025, higher than the Japanese regional banks’ average.

This is due to its focus on the small and medium enterprise (SME) segment.

SCB's profitability, though still weak, has been gradually improving, driven by expanding net interest income supported by rising domestic interest rates as well as rising fee income, the ratings agency said.

The bank is likely to receive support from the government of Japan in times of need, Moody’s said.