Asahi Bank said Thursday it will post a group net loss of 60 billion yen for the six months to Sept. 30, after shouldering heavy losses from soured loans and stock market plunges.

The revision is down from the 15 billion yen profit projected in May, and is the last of a string of cuts to forecast earnings among the nation's eight top banks. All eight have slashed their first-half figures for the 2001 business year, with only two -- Sumitomo Mitsui Banking Corp. and Sumitomo Trust and Banking Co. -- making profit forecasts so far.

Like the others, Asahi blamed tumbling stock markets for its woes.

Asahi will set aside 90 billion yen in appraisal costs to cover stock price losses. These costs will further reduce Asahi's surplus for dividend payouts to a thin 2 billion yen, down from 41.8 billion yen at the end of March.

"Even after the losses, we will still retain a capital adequacy ratio of roughly 10 percent," said Tadahiro Tone, Asahi's senior managing director.

Market concerns about Asahi's thinning capital base forced the bank to seek shelter in a planned union with Daiwa Bank and two regional banks.

Although the bank will skip its interim dividend payments, it will be able to make dividend payments for the full year following the union, Tone said.

Banks that received a 1999 injection of public funds to strengthen their capital bases risk having the government taking a bigger role in management if they do not pay a full-year dividend on preferred shares.

Banks remain vulnerable to market fluctuations because of their massive shareholdings, a byproduct of the nation's crumbling "convoy" system in which banks and corporations used to buy huge chunks of one another's shares as protection against market pressures.

Starting this business year, banks are required to post appraisal losses on all stockholdings whose market value at the end of September fell by 50 percent or more below the book value. With markets at a level 25 percent lower than where they were six months ago, unwinding these cross-held shares is a top priority.

Asahi means to pick up the pace of its unwinding, and plans to exceed its planned 500 billion yen sales in equities for the full business year, Tone said.

As of Sept. 30, the bank had 1.5 trillion yen in such shareholdings, after unwinding about 260 billion yen since the end of March.

After setting aside 60 billion yen in loan-loss charges, Asahi's earnings further dipped with the collapse of large companies, such as supermarket retailer Mycal Corp., which carries 1.7 trillion yen in liabilities.

Sumitomo Mitsui gloom

Sumitomo Mitsui Banking Corp. on Thursday sharply reduced its consolidated projections for the first half of the business year through Sept. 30, due mainly to appraisal losses on stockholdings and increased writeoffs of bad loans.

The bank said it will report a consolidated net profit of 30 billion yen and pretax profit of 110 billion yen for the first six months of the business year.

The new projections are sharply lower than the net profit of 75 billion yen and pretax profit of 180 billion yen anticipated in May.

Among Japan's four largest financial groups, however, Sumitomo Mitsui will be the only one profitable on a consolidated basis in the first half of the business year.

Mizuho Holdings Inc., Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. have all announced they will report losses in group businesses for the April-September period, due partly to appraisal losses on their stockholdings, stemming from the depressed stock prices, as well as increased bad-loan writeoffs.

Under the new accounting rules introduced this business year, banks are required to report appraisal losses on all stocks on hand that have declined in value by more than 50 percent from their book values. The rule is aimed at increasing balance sheet transparency.

Chukyo to join UFJ

NAGOYA (Kyodo) Chukyo Bank said Thursday it will join UFJ Holdings Inc. after asking Tokai Bank, a core member of the major financial group, to support its capital reinforcement plan.

The midsize Nagoya-based regional bank said it plans to raise some 20 billion yen by the end of March, mainly through a third-party allotment of new shares to the major commercial bank, in order to strengthen its ailing capital base.

While the new share issue is expected to raise Tokai's equity stake in Chukyo to around 25 percent from 4.5 percent, Chukyo President Haruhiko Inoue said it will also boost his bank's capital-adequacy ratio to a healthy 8 percent from the 5.9 percent projected for the Sept. 30 end of the fiscal first half.

Tokai, also based in Nagoya, expressed willingness Thursday to meet Chukyo's request, saying that it will "decide on specific steps to reinforce relations between the two banks as early as possible."

Tokai makes up the UFJ group with Sanwa Bank and Toyo Trust & Banking Co. Tokai and Sanwa are due to merge into UFJ Bank in January.

For the April-September first half of the business year, Chukyo expects to book a consolidated net loss of 17.4 billion yen, a sharp drop from its initial forecast of 800 million yen profit, due largely to appraisal losses on stock portfolios and write-offs of bad loans.

The bank sees an urgent need to strengthen its capital base ahead of March 31.

At that time, the removal of the government's blanket guarantee for bank deposits is likely to scare depositors away from financially weak banks, according to banking industry sources.