Sumitomo Mitsui Financial Group Inc. said Monday it expects to record a 240 billion yen group net loss for the current financial year.

In November, it had forecast a 180 billion yen net profit.

SMFG made the downward revision after writing off more bad loans than planned, reportedly in response to a recent inspection by the Financial Services Agency. It now expects bad-loan disposal costs to total 950 billion yen for the year, up from the previously estimated 650 billion yen. Its annual dividend will drop to 3,000 yen per share from 4,000 yen.

“We have decided to take enough steps to handle future risks and aim to ensure a sharp recovery in earnings in the next business year,” SMFG Deputy President Teisuke Kitayama told a news conference in Tokyo.

He added that while the group needs to consider a capital increase, it has not decided on a specific plan.

Company sources said privately that SMFG plans to raise about 200 billion yen to maintain its capital adequacy ratio by allotting preferred shares to companies with close business ties.

On Friday, SMFG said it was abandoning its controversial attempt to merge with UFJ Holdings Inc.

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