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Mitsubishi UFJ Financial Group Inc. earned a net profit of more than 1 trillion yen in the 2005 business year while competitor Mizuho Financial Group Inc. booked a record-high net profit, according to earnings reports released Monday by Japan’s top two banks.

MUFG’s combined net profit totaled 1.182 trillion yen for the year, making it Japan’s second-largest earner after Toyota Motor Corp.

MUFG, created Oct. 1 through the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc., is the world’s largest banking group in terms of assets.

In the previous year to March 2005, the Mitsubishi Tokyo Financial Group logged a consolidated net profit of 338.42 billion yen and UFJ incurred a group net loss of 554.53 billion yen.

MUFG said it will raise its full-year dividend to 7,000 yen per share for the reporting year from 6,000 yen the previous year, reflecting growth in core banking revenues and steady progress in cleaning up its balance sheet.

In June, the group said it would finish paying back public money the government injected into its component banks to steady their crumbling capital bases in 1998 and 1999.

In March 1999, the banks got a 1.8 trillion yen public bailout by selling preferred shares and subordinated bonds to the government. That came after an injection of 400 billion yen a year earlier that was also financed by sales of subordinated bonds to the government.

The public money was needed to bolster the banks’ depleted capital bases and stabilize the banking system, which was being undermined by mountains of bad loans.

Mizuho Financial Group Inc. is expected to finish repaying its portion of the injection possibly in July, Mizuho officials said.

Mizuho’s net profit for the year through March 31 rose 3.6 percent from the previous year to a record 649.90 billion yen, thanks to growing commission income and smaller credit costs helped by the economic recovery.

In its consolidated earnings report for fiscal 2005, Mizuho — one of the country’s three megabank groups — reported a pretax profit of 921.07 billion yen, up 40.1 percent, on operating revenues of 3.56 trillion yen, up 17.1 percent.

Mizuho said it will raise its full-year dividend to 4,000 yen per share for fiscal 2005, up from 3,500 yen for the previous year.

The balance of Mizuho’s bad loans fell to 1.05 trillion yen as of March 31 from 1.30 trillion yen as of last Sept. 30.

The ratio of bad loans to total group lending fell to 1.41 percent as of March 31, compared with 1.85 percent on Sept. 30.

It logged 889.28 billion yen in operating profit — a key gauge of profitability at banks for the reporting year, up from 800.01 billion yen the year before.

Operating profit is calculated by subtracting loan-loss provisions and taxes from profits at the institution’s core banking business.

For fiscal 2006 to next March 31, Mizuho forecasts a group net profit of 720 billion yen and pretax profit of 1.12 trillion yen on operating revenue of 3.80 trillion yen.

The two remaining bank groups — Sumitomo Mitsui Financial Group Inc. and Resona Holdings Inc. — are scheduled to release their earnings reports Tuesday afternoon.

In addition to the two giant banking groups, two other large banks also reported record highs in consolidated net profit Monday.

Mitsui Trust Holdings Inc. logged a record group net profit of 119.68 billion yen in the year to March 31, up 27.3 percent from the previous year.

The holding company, which controls Chuo Mitsui Trust & Banking Co. and Mitsui Asset Trust & Banking Co., said its consolidated pretax profit fell 12.1 percent to 138.36 billion yen on operating revenues of 481.04 billion yen, down 5.8 percent.

Sumitomo Trust & Banking Co. said its group net profit in 2005 rose 3.3 percent to a record high 100.07 billion yen.

Sumitomo Trust said its consolidated pretax profit expanded 28.2 percent to 171.95 billion yen on operating revenues of 789.88 billion yen, up 57.7 percent.

Bank of Yokohama

The Bank of Yokohama, Japan’s largest regional bank, said Monday its group net profit in the business year to March 31 rose 5.4 percent from the previous year to 60.85 billion yen, hitting a record high for the third consecutive year.

The bank attributed the strong results mainly to a fall in bad-loan disposal costs and a rise in commission revenues from sales of investment trusts and other financial products.

Before taxes and extraordinary items, the Bank of Yokohama posted a group profit of 102.77 billion yen, up 6.5 percent. Its consolidated operating revenues totaled 246.04 billion yen, down 5.5 percent.

The bank said its core operating profit — a key gauge of a bank’s profitability — totaled 122.50 billion yen for fiscal 2005, compared with the previous year’s 122.12 billion yen.

Its balance of nonperforming loans fell to 215.05 billion yen as of March 31, down from 224.55 billion yen six months earlier.

Aozora up 33.6%

Aozora Bank said Monday it chalked up a group net profit of 120.11 billion yen, up 33.6 percent from a year earlier.

Group pretax profit rose to 61.44 billion yen, up 34.5 percent, the bank said in its first earnings report since the last long-term credit bank converted itself into an ordinary bank April 1.

Operating profit from the core banking business rose to 64.20 billion yen from the previous year 49.69 billion yen.

Payback plans lauded

The Financial Services Agency welcomed on Monday the intention of big commercial banks to finish paying back public funds to the government.

The megabanks “now can definitely declare their readiness to return (public funds) while maintaining their financial health,” FSA Commissioner Fumihiro Gomi said.

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