OSAKA — Nonbank moneylender Nichiei Co. said Friday that its group net balance sank into the red in fiscal 1999 for the first time since its founding in 1970, due largely to a public outcry over its loan collection methods.
In the year to March 31, the Nichiei group racked up a net loss of 14.23 billion yen, against a profit of 33.1 billion yen the previous fiscal year.
Pretax profit plunged 67.1 percent to 21.51 billion yen from 65.32 billion yen while operating revenues — chiefly interest income — came to 118.47 billion yen, down 22.1 percent.
Nichiei blamed the plunge into the red on a group net basis on the 33 billion yen loss incurred by a subsidiary in charge of collecting loans from borrowers and their guarantors.
Financial authorities ordered Nichiei in January to suspend operations at its head office in Kyoto and all 180 branches after concluding the Kyoto-based company had engaged in coercive loan collection practices, violating the money lending business law.
On a parent-only basis, Nichiei’s pretax and net balances remained in the black, but its pretax and net profits dropped for the first time since its 1993 debut on the Tokyo Stock Exchange.
On a consolidated basis, the balance of outstanding loans — both loans and lending based on bill discounts — came to 355.6 billion yen, a drop of 31.9 percent.
High-interest “shoko” loans with annual rates of up to 40.004 percent to small and midsize businesses dropped 41 percent to 268.2 billion yen.
Looking ahead, Nichiei forecasts its group net balance will swing back into the black despite new legislation cutting the upper interest limit moneylenders are allowed to charge.
Group net profit will come to 4.5 billion yen on projected operating revenues of 86 billion yen, the company said. Group pretax profit will come to 10 billion yen.
Shoko loans are typically extended without collateral on condition they are guaranteed by a third party, usually individuals.
The legislation will cut the upper limit to 29.2 percent from the current 40.004 percent starting Thursday.
In a related development, Nichiei President Ryuichi Matsuda told a news conference that Nichiei has decided to fire four employees who allegedly used threats to force borrowers and their guarantors to repay loans.
Matsuda is Kazuo Matsuda’s son, who stepped down as Nichiei president in February amid the outcry over Nichiei’s methods.