Fitch said Friday it cut the credit rating of three of Japan's biggest banks over concerns about Tokyo's ability to support the financial sector, after the nation's sovereign debt rating was also cut.
The ratings agency lowered its rating by one notch to 'A-' from 'A' -- the seventh highest on a 22-rating scale -- for Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group (MHFG), and Sumitomo Mitsui Financial Group.
In the same statement, Fitch said it also lowered its rating for Sumitomo Mitsui Trust Bank to the same level as the major banks.
"The downgrade...reflects the government's weakened financial ability to support the banking system as indicated by the downgrade of (Japan's sovereign rating)," Fitch said in a statement.
In May, the agency cut Japan's credit rating, citing its "leisurely" efforts at shrinking a massive public debt, as Tokyo struggles to kickstart the world's third-largest economy.
The agency downgraded Japan's long-term rating to "A+" from "AA", with a negative outlook, noting "growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios".
Fitch on Friday kept its outlook on the Japanese lenders at stable, which suggested it had no imminent plan to cut their ratings again.
The agency's downgrade on the banks comes about two months after they reported across-the-board surges in annual profits, with Mitsubishi UFJ posting a 68 percent spike on trading and one-time gains.
The trio's combined net profits totalled nearly 2.0 trillion yen, the largest since the global financial crisis with Japanese lenders having suffered less than most of their Western counterparts.
However the figures weren't rooted in their core banking business of lending, but rather factors including gains from sales of Japanese government bonds, which lenders have relied on for returns amid sluggish loan demand.
The downgrade on Japan's sovereign rating followed similar downgrades by rival agencies Moody's and Standard & Poor's in the past year and a half.
Japan has an eye-watering national debt that amounts to more than twice its gross domestic product -- the highest among industrialised nations and a problem that would usually mean paying a high premium to borrow funds.
But its bonds are mostly held by domestic investors, with Japan paying low interest rates on its debt while being less vulnerable to criticism from foreign buyers over its fiscal management -- a fate that has befallen Greece.
However, Fitch said in May that Japan's debt load was projected to hit 239 percent of output by year's end, "by far the highest for any Fitch-rated sovereign" debt, outpacing Spain, Italy and even beleaguered Athens.
Billions of dollars in reconstruction spending following last year's quake-tsunami disaster is expected to add to the debt mountain.