It has been the same story for years. When banks release their earnings reports in May, bank officials say they have written off their bad loans “pre-emptively.” Since they have written off huge portions of their problem loans, their future costs for bad-loan disposal will be marginal, they say.

But as the year progresses, the banks revise upward their estimates for additional writeoffs. Some cite a continuing decline in the price of real estate secured as collateral.

Others say they were forced to put up more loss reserves because their borrowers suddenly went belly-up or asked for debt forgiveness from banks in a last-minute attempt to avoid bankruptcy.

The fiscal 1999 results, released by major banks by Wednesday, follow the same trend. It seems the much-awaited end to the nation’s bad loan woes — which have plagued the banking industry throughout the 1990s — is not in sight yet.

To be fair, fiscal 1999 was a relatively good year for most banks. All of the major banks except Nippon Trust Bank and Yasuda Trust & Banking Co. returned to the black after posting at least a year of losses.

The size of new bad-loan disposals also came down to a combined 4.49 trillion yen for the 16 banks, less than half the approximate 10 trillion yen the banks wrote off the year before.

But a closer look at their earnings reports shows that the banks earned huge profits from one-off sales of securities. Six city banks each reported more than 400 billion yen in gains from sales of stocks.

Had the market been bearish, the huge writeoffs would have surely put the banks into the red again.

The Industrial Bank of Japan said they spent a total of 220 billion yen in fiscal 1999 to write off their bad loans, up from the original estimate of 40 billion yen compiled a year ago.

Yuji Watanabe, managing director at IBJ, admitted that the bank’s writeoff plans a year ago were “very optimistic.”

Another official for a major city bank was less critical of the gap between the original estimate for credit costs and the actual costs. “An estimate is an estimate,” he said jadedly. “You can’t predict what will happen a year in advance.”

But if the banks cannot grasp their future risks, will they ever be able to shake off their bad loans? Many banks, while stressing they have done the best they can, are unwilling to declare an end to the bad-loan problem.

Said Fuji Bank’s Chief Financial Officer Terunobu Maeda: “I won’t tell you we have passed the peak (of bad loan disposal), because if I do, you will tell me we have scaled many peaks.”

James Fiorillo, bank analyst for ING Barings, said that bad debt will continue to be a concern at least for another couple of years.

“Nasty trends like real estate price deflation and bankruptcies have a way of lagging an economic recovery,” he said. “New bad debts are coming online.”

Six major banks profit

All but one of seven major banks that released fiscal 1999 earnings reports Wednesday reported profits after at least a year of posting losses.

On an unconsolidated basis, pretax profits for Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan — which will form the Mizuho financial group this fall — were 218.9 billion yen, 223.3 billion yen and 138.8 billion yen, respectively. All three posted pretax losses the previous year.

Net business profits — a key measurement of performance — rose for all three. DKB reported 345.7 billion yen in net business profit for a rise of 93.6 percent from the year before, while Fuji reported 264.5 billion yen, up 37.2 percent, and IBJ 221.3 billion, yen up 4.3 percent.

Tokai Bank and Asahi Bank, which will integrate with Sanwa Bank next April, also released their results Wednesday.

Tokai reported 118.9 billion yen in pretax profits compared with a loss of 339.2 billion yen the previous year. Asahi also posted a comeback, logging 88 billion yen in pretax profits compared with a loss of 407.5 billion yen the same period a year earlier.

Yasuda Trust & Banking Co., a Fuji Bank subsidiary, posted pretax losses of 18.9 billion yen, with net business profit falling to 10.5 billion yen, down 62.4 percent.