All of Japan’s top six banks reported better earnings for the April-December period than a year ago, backed by decreased bad-loan disposal costs or lower stock investment losses, according to financial statements released as of Monday.
Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and three smaller lenders are projecting net profits for the 2009 business year ending March 31.
Although the banks had relatively lower exposure to risky investments compared with their U.S. and European peers, they logged net losses or slimmer profits in the 2008 business year due to an increase in bad loans and plummeting share prices in the wake of the global financial crisis.
SMFG, Japan’s third-largest banking group by assets, said Monday its group net profit nearly tripled from a year earlier to ¥247.84 billion during the nine-month period through Dec. 31.
Industry leader MUFG said last week it posted a net profit of ¥217.07 billion for the same period, emerging from a year-earlier loss of ¥42.07 billion.
Late last month, No. 2 lender Mizuho said it registered a net profit of ¥126.28 billion for the April-December period, compared with a loss of ¥50.55 billion in the corresponding period of 2008.
According to earnings results for the nine-month period released in late January, group net profit rose 5.6 percent to ¥121.12 billion at fourth-ranked Resona Holdings Inc., soared 155.9 percent to ¥52.21 billion at Sumitomo Trust & Banking Co., and surged 190.8 percent to ¥26.66 billion at Chuo Mitsui Trust Holdings Inc.
Sumitomo Trust and Chuo Mitsui plan to merge in April 2011 to create Japan’s largest trust bank.
In the April-December period, improved economic conditions and a rebound in stock prices helped the lenders improve their bottom-line profits.
SMFG said bad loan-related costs at its mainstay banking unit Sumitomo Mitsui Banking Corp. decreased 34.7 percent from a year earlier to ¥180.6 billion and its stock investment losses fell sharply to ¥300 million from the previous year’s ¥106.6 billion.
Its earnings also benefited from the acquisition of Nikko Cordial Securities Inc. from Citigroup Inc. last year, SMFG said.
SMFG already achieved its full-year profit target of ¥220 billion within the first nine months, but it left the target unchanged citing uncertainties over the business environment.
Despite the improvement in bottom-line net profits, a full-fledged recovery is yet to be seen in the banking industry, as four of the six lenders saw a fall in their core operating profits — a key gauge of the profitability of their mainstay businesses — amid sluggish demand for loans.
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