Note 2-15

(15) Special inspections in fiscal 2001 led to an increase of ¥1.9 trillion in loan-loss reserves, which might have helped to reduce overall NPL disposal losses in fiscal 2002. Loan-loss reserves' coverage of total loans to borrowers need management at the major banks increased by about 12 percentage points from 21.1% in fiscal 2001 to 33.0% in fiscal 2002 due partly to the application of the discount cash flow method for appraisal of assets, indicating these banks' own assessment of loans was made more strictly.