financial institutions is particularly important in ensuring financial system stability and economic growth. next, i discuss the measures towards enhancing profitability. objective assessment of risk and return balances first, financial institutions should further improve the methods of assessing risk - return balances. in order to improve profitability, they must first assess the nature and the size of the risks inherent in financial products and services as well as the risks with the related asset holdings and financial transactions. without the accurate assessment of its risk - return balances, specific action plans that contribute to enhancing profitability cannot be taken. it has been pointed out that investment banking and overseas business activities need to be reinforced at major banks, which currently have a hard time improving profitability via their domestic commercial banking business. looking at the risk taking behavior of major banks from the perspective of integrated risk management, both credit risk and the risks associated with long - term stockholdings have increased. as such, overall risks including interest rate risk and operational risk are already reaching an amount equivalent to their core capital. that is, most of the core capital has already been used to cover the risks associated with the current financial products and services. therefore, be it investment banking or overseas business activities, banks need to scrape together capital by assessing the current operations'risk - return balances and scale down those with low risk - return balances in order to explore new risk taking opportunities through new business operations with a higher additional value. efforts are being made among major banks where the so - called " credit portfolio management " is used to reduce concentrated credit exposure, enhancing the efficiency of loan portfolios. further efforts on this front to improve returns are called for. regional banks allegedly have a mission to provide long - term support to regional customers'economic activity. for example, one might say that in dealing with a regional customer, a long term business relationship is more important than short term profits and the bank has to give support to the firm which might face a temporary downturn of its business. if regional banks are to take the risks associated with long term commitment to their respective regions, it is essential that they have the capability to assess such risks. for example, if the duration of loans to a local firm has become long, then it is necessary to quantify the risk by taking account of the period of loans extended. moreover, if part of the loan is constantly rolled over, its associated risk should be treated in line with the risk of equity investments. once the risks associated with regional commitment

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