Dai-ichi Kangyo Bank announced Mar. 7 that it will revise downward its earnings projections for the current business year and post its first-ever pretax losses to place greater priority on writing off its bad loans.
Executive director Fumio Akanuma said the bank now expects to post pretax losses of 300 billion yen -- 340 billion yen less than November forecasts of a 40 billion yen profit -- in earnings reports for the year ending this month. The losses are the first since two banks merged in 1971 to form Dai-ichi Kangyo Bank. Its net business profit for the current business year, initially put at 340 billion yen, was placed at 370 billion yen.
According to the revised projections, the bank plans to write off a total 550 billion yen worth of nonperforming loans this fiscal year, leaving it with 1.35 trillion yen in sour loans at the end of March. The bank felt it necessary to get rid of its nonperforming assets swiftly if it was to meet the challenges posed by planned "Big Bang" financial deregulations to be completed by 2001, Akanuma explained. He said the bank will still pay out the dividends it forecast in its midterm report, and would step up restructuring efforts to help win the understanding of shareholders.
Cuts in executives' salaries would be considered, and the bank would add 1,000 people to its initial employee cutback plan, thereby lowering its workforce by 3,000 by fiscal 2000. The first 2,000 would be released by the end of fiscal 1997, Akanuma added. "I believe this action (of downward revision) will be accepted, since it is made in a serious effort to strengthen the bank," Akanuma stressed.