TOKYO (Reuters) – Tetsuya Kan, head of a major regional bank in Osaka, said it will take two more years for the western Japan prefecture to recover from the damage caused by COVID-19, which has crushed the city’s once thriving tourism and retail sectors.

The vast number of Asian tourists who had flocked to Osaka’s shopping arcades disappeared after Japan banned entry for most overseas visitors, hitting hotels, restaurants and drug stores.

“The fate of the region’s economy depends on how long the pandemic will persist, and whether the restaurants and hotels can bounce back,” said Kan, president of Kansai Mirai Bank, the fourth largest lender in Osaka prefecture.

“The damage from the pandemic (on the region’s economy) will probably last for about two years,” he told Reuters on Friday.

The pandemic has added pains to regional banks like Kansai Mirai, already reeling from narrowing margins due to decades of ultra-low interest rates and a shrinking domestic market.

Kansai Mirai and its smaller merged partner Minato Bank expect combined credit costs to nearly triple from year-before levels to 12.5 billion yen ($116.6 million) in the fiscal year that began in April.

“This is a conservative amount that took account future potential risks, so I don’t think actual costs will exceed this sum. But we can’t be complacent,” Kan said.

Kansai Mirai Financial Group (7321.T), to which Kansai Mirai Bank belongs, saw net profit from core business operations fall 7% to 25.7 billion yen in the year ended in March. It expects profits to fall to 21 billion yen in the current fiscal year.

The number of bankruptcies in Osaka stood at 71 in May and may nearly triple in June, according to private think-tank Tokyo Shoko Research.

Osaka’s unique food culture and proximity to ancient cities like Kyoto had made it among the most popular destinations for foreign tourists until COVID-19 hit.

The prefecture attracted over 12 million overseas visitors in 2019. While there is no data available on Osaka this year, total overseas visitors to Japan fell to a record low 1,700 in May, down 99.9% from a year ago.

($1 = 107.1700 yen)

Reporting by Leika Kihara; Editing by Sam Holmes

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

JPMorgan dismisses employees for misuse of COVID-19 relief funds: Financial Times

(Reuters) – JPMorgan Chase & Co (JPM.N) on Wednesday dismissed several employees who allegedly misused funds that were supposed to help businesses dealing with the COVID-19 pandemic, the Financial Times reported, citing a person familiar with the situation. Individuals who…

Tablet Market Surged in Second Quarter

The global market for tablet computers surged in the second quarter of 2020, despite pandemic conditions, as the global market for the devices jumped 17%, the largest gain in six years. That’s according to a survey released this week by…

Coronavirus panic shopping tests the resilience of America’s stores

New York (CNN Business)Americans across the country are stocking up on hand sanitizer, cleaning wipes, toilet paper and other products to prepare for the spread of coronavirus. Long lines at stores and panic buying on cleaning products throughout the country…

Private haven for wealthy received $2M from small business loan program

A housing association representing the richest zip code in America was approved to receive a $2 million emergency coronavirus relief loan from the Small Business Administration, despite suffering no layoffs and no apparent financial impact from the coronavirus pandemic. The…