Second-tier regional banks returned to profitability in fiscal 1999 for the first time in four years due largely to a substantial drop in bad-loan writeoffs and profits from share sales, an industry association said Friday.

The Second Association of Regional Banks said a survey of 48 of its 54 member banks found that combined pretax profits came to 43.3 billion yen on an unconsolidated basis in the year to March 31. With 22 banks swinging back into the black, all of the 48 banks surveyed reported pretax profits. The survey excluded five failed banks and a new bank created last year.

Net business profits — profits from core banking operations such as lending and bond dealings before taxes and costs related to loan-loss provisions are subtracted — totaled 356.4 billion yen, up 25.6 percent from fiscal 1998.

Capital-adequacy ratios of the 54 banks, most of which used to be mutual banks, averaged 8.06 percent, up 1.27 percentage points, topping the 4 percent required for domestic operation.

Nonperforming loans at the 54 banks increased 22.2 percent to 2.921 trillion yen because of a drop in the value of real estate used as collateral.

Stricter definitions of problem loans, based on instructions from the Financial Supervisory Agency, also contributed to the growth of “risk-managed” loans.

The amount of nonperforming loans equaled 6.6 percent of total lending, up 1.2 percentage points from the previous year.

The 48 banks spent 403.6 billion yen on writing off problem loans or setting aside possible loan-loss reserves, down 37.7 percent.

ATM expansion eyed

Dai-Ichi Kangyo Bank, Fuji Bank and Yasuda Trust & Banking Co., all members of the planned Mizuho Financial Group, said Friday they will expand and further integrate their automated teller machine operations.

Under the collaboration deal, DKB and Yasuda Trust will slash charges for cash withdrawals at ATMs.

Currently, a fee of 105 yen is charged if customers withdraw money from an ATM at a bank where they do not have an account.

For ordinary deposits via ATM, Fuji Bank announced it will waive all extra charges for Yasuda Trust customers starting June 19.