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Wednesday, Nov. 19, 2008

Profits nosedive at major banking groups

Staff writer

Net profit at the three major banking groups fell in the six months to September amid the ongoing global economic turmoil, according to their earnings results for the first business half.

News photo
Bad tidings: Mitsubishi UFJ Financial Group Inc. President Nobuo Kuroyanagi announces his group's dismal first-half earnings in Tokyo on Tuesday. KYODO PHOTO

On Tuesday, Mitsubishi UFJ Financial Group Inc. said its consolidated net income fell 64.1 percent to ¥92 billion between April and September.

MUFG said it booked net operating profit of ¥623.8 billion, 15.2 percent less than a year ago.

"Our relatively large bank is like a mirror reflecting the state of the economy," MUFG President Nobuo Kuroyanagi told a news conference. "When the economic activity is sound, (our business) will grow. When the economy is bad, demand for lending will decrease and the market situation will stagnate."

Credit costs rose 25.2 percent to ¥334.9 billion due to credit rating changes that reflected domestic and overseas economic slowdowns and the deterioration of corporate performance, the group said.

Due to recent stock market plunges, net gains on securities plummeted 238.4 percent for a loss of ¥75.2 billion.

The group expects to post net income of ¥220 billion in the full business year to March, down 65.4 percent from the end of March this year.

Mizuho Financial Group Inc. also posted dismal results.

Mizuho President Terunobu Maeda expressed his disappointment as he announced the group's earnings for the first half last week.

"If you look at this, all was negative and nothing was good at all," Maeda told reporters.

Mizuho group said its consolidated net income fell 71.1 percent to ¥94.5 billion in the six months to September.

Net operating profit fell 23.3 percent to ¥317.4 billion.

Mizuho revised downward its forecast for group net profit to ¥250 billion for the full year to next March.

Sumitomo Mitsui Financial Group Inc. reported a 51.2 percent plunge in consolidated net profit to ¥83.3 billion for the April-September period.

Net operating profit fell 17.9 percent to ¥410 billion.

For the full business year to March, the group forecasts net profit of ¥180 billion, down 61 percent from last year.

Nana Otsuki, a senior analyst at UBS Securities, said banks' earnings such as revenues from commission fees did not rise, while costs related to bad-loan disposals ballooned.

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The Japan Times

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