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Friday, May 16, 2008
Mizuho profit drops 50%; worst said over
Mizuho Financial Group Inc., Japan's No. 2 banking group by assets, said Thursday its group net profit dropped 49.8 percent to ¥311.2 billion in business 2007 because of losses from the U.S. subprime loan crisis.
Mizuho booked ¥645 billion in losses related to the subprime mortgage loan upheaval in the business year to March. Most of the losses stemmed from Mizuho Securities Co., an investment banking unit of the group, which posted a subprime loan-related loss of ¥413 billion.
Mizuho Financial Group forecasts group net profit for the business year to next March at ¥560 billion. Though up 79.9 percent from business 2007, it is nonetheless lower than the ¥621 billion net profit in 2006, before the mortgage loan crisis surfaced.
"The effect of the U.S. subprime loan situation will still remain in the first half of this fiscal year," said Mizuho President Terunobu Maeda, in explaining why the net profit forecast for the current business year will not reach the ¥600 billion mark.
In its midterm result announced in November, Mizuho booked ¥70 billion in losses incurred from the U.S. subprime loan turmoil, far less than the figure it announced Thursday.
Mizuho claimed that most of the losses were booked in the January-March quarter, when it suffered a deficit of ¥300 billion related to subprime mortgage loans.
But because Mizuho Securities realized ¥404 billion in losses by the end of March — or most of the ¥470 billion worth of securities products it had at the end of December — Maeda stressed that the banking group is no longer at high risk of exposure to such products.
"I think we have completely passed the peak" of the damages of the U.S. subprime crisis, Maeda said.
On a consolidated basis, Mizuho's capital adequacy ratio was 11.69 percent at the end of March, down from 12.48 percent at the end of March 2007.
Mizuho Financial is made up of three core banking units — Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking Co. — as well as subsidiaries and affiliates.
Sumitomo Trust hit
Sumitomo Trust & Banking Co. said Thursday its group net profit was down 20.7 percent in the year through March, falling to ¥82.34 billion due to credit losses stemming from the U.S. subprime mortgage crisis.
The bank posted ¥79.3 billion in losses on investments linked to the risky housing loan market.
Consolidated pretax profit for business 2007 slid 19.5 percent to ¥136.99 billion on operating revenues of ¥1.10 trillion, up 28.4 percent.
Sumitomo Trust's parent-only operating profit from core banking business fell 1.2 percent to ¥173.88 billion.
The trust bank plans to pay a dividend of ¥17 per share for the reporting year, unchanged from a year before.
For this year through next March, the bank projects group net profit of ¥100 billion, up 21.4 percent, and pretax profit of ¥170 billion, up 24.1 percent, on operating revenues of ¥1.02 trillion, down 6.9 percent.