Daiwa Bank and Sanwa Bank, two of the nation’s city banks, will ask for 300 billion yen and 600 billion yen each in public funds under the provisions of the newly adopted bank recapitalization law, officials of the two banks said Thursday as they released their midterm earnings reports.

Most of Japan’s 18 major banks plan to specify the amount of public funds they will request under the new law during news conferences they began to call Thursday for releasing their midterm financial results.

The two banks said they expect to go into the red when they close their books for the current fiscal year in March. The banks attributed the projections to active efforts to write off problem loans from their books and get ready for capital injections.

According to the results, Daiwa Bank registered on an unconsolidated basis 7.1 billion yen in pretax profits for the April-September period, down 6 percent from the same period last year, and 10.6 billion yen in net profits, up 59.1 percent.

As to operational profits, Daiwa posted 277.3 billion yen for the latest midterm, up 26.2 percent from the previous one, Daiwa officials said.

Meanwhile, Sanwa Bank logged 13.2 billion yen in pretax profits for the same period, down 31.4 percent from the last midterm, and 292.2 billion yen in net profits, up 91.1 percent, the results indicate.

The bank reported over 1.1 trillion yen in operational profits for the current midterm. The figure is a 7.9 percent increase from midterm 1997, Sanwa officials said.

In terms of pretax earnings, however, Sanwa Bank fell into the red for two consecutive midterms. Sanwa officials explained that their efforts to write off nonperforming loans from their balance sheet resulted in the showing.

Also in combating bad loans, Daiwa Bank spent 53.6 billion yen during the last six months, up 47.2 percent from the previous midterm, while it took Sanwa Bank about 215.8 billion yen, up 79.5 percent, in the same period, the results show.

In their earnings reports, the two banks also specified their corporate restructuring plans to slash operational costs and increase internal reserves.

Daiwa Bank announced in its midterm report it will retreat from overseas operations by March 2000 and scale down its domestic branch offices from the current 181 to 170 by next March. Daiwa will focus on retail banking centered in the Kansai region, the bank said.

Meanwhile, Sanwa Bank said it will reduce the number of its U.S. and European branches and the number of its branch offices from 391 to 373 in next March.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.