Forty-five of 86 listed regional banks have revised upward their group net earnings projections for the April-September first half of fiscal 2009.
The upward revisions are attributable to their lower than expected costs involved in disposing of bad loans as corporate failures have slowed due to the government's economic stimulus measures, as well as better securities investment returns.
However, most regionals have kept their earnings forecasts unchanged for the entire 2009 business year due to concerns about a possible increase in bankruptcies of their corporate clients because their sales have not fully recovered.
Juroku Bank, based in Gifu, revised its group net profit projection upward to ¥4.55 billion from ¥3.05 billion projected in May as its bad loan disposal costs fell to ¥2.6 billion from an estimated ¥6 billion.
The Bank of Saga revised upward its group net profit forecast to ¥2.1 billion from ¥500 million as its bad loan disposal costs fell to ¥1.9 billion from the earlier estimated ¥2.8 billion.
Daito Bank, based in Koriyama, Fukushima Prefecture, raised its group net profit projection to ¥680 million from ¥500 million.
Masahiko Nomura, an analyst at the Financial and Economic Research Center of Nomura Securities Co., said bad loan disposal costs decreased due to effective easing in disposal of loan-loss reserves following a shift in inspection policy by the Financial Services Agency.
In terms of securities investment returns, Hachijuni Bank, based in Nagano, incurred a loss of ¥1.6 billion — far less than the expected ¥3.1 billion — due to a recovery in financial markets.
Meanwhile, 11 regional banks revised downward their group net earnings forecasts for the first half of fiscal 2009.