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Eight of the nation’s city banks remained in the red at the end of fiscal 1998, a year they spent boosting loan-loss reserves and writing off nonperforming loans, according to earnings reports released by Friday.

Despite their efforts, however, the banks are still saddled with a massive amount of bad loans, and it may take time before they are given a clean bill of health.

All of Japan’s nine city banks except Daiwa had released their fiscal 1998 results by Friday; Daiwa will release its report Tuesday.

All eight incurred pretax losses, ranging from 22.3 billion yen for the Bank of Tokyo-Mitsubishi to 754.2 billion yen for Sakura Bank.

The losses were largely due to beefed-up loan-loss reserves and writeoffs of sour loans.

The losses came despite massive injections of public funds and allocations of new shares to firms with close ties.

The number of sour loans disclosed by many of the banks also rose under new disclosure standards, which authorities outlined in October.

The new rules require banks to count not only loans but also total credit extended to firms, such as overdue interest income, temporary payments and repayment guarantees. This credit is then classified into four categories depending on their degree of risk.

For example, Sumitomo Bank said its bad loans under the new rules came to 2.01 trillion yen at the end of fiscal 1998. Under the old disclosure rules, Sumitomo had 1.47 trillion yen in bad loans as of the end of fiscal 1997.

Of the total sour-loan figure, loans to bankrupt or virtually bankrupt borrowers amounted to 217.3 billion yen, while loans to firms in very bad financial condition totaled 1.48 trillion yen.

Less risky loans — restructured loans and those in arrears for at least three months — accounted for 320.1 billion yen of the total. The banks had some 1.05 trillion yen in loss reserves to cover their shaky loans.

Net business profits varied from bank to bank in fiscal 1998, ranging from the 559.1 billion yen — a year-on-year rise of 63.1 percent — secured by Tokyo-Mitsubishi to the 83.9 billion yen chalked up by Asahi Bank, which suffered a 46.3 percent decline in the figure.

Disclosure rules on bad loans held by banks have frequently changed in recent years, each time responding to criticism that financial institutions’ balance sheets do not reflect the true extent of their bad loans.

All eight banks except for the Bank of Tokyo-Mitsubishi received capital injections of public funds ranging from 408 billion yen to 1 trillion yen each at the end of March. Tokyo-Mitsubishi boosted its capital base through its own efforts.

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