• Kyodo

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Japan’s five major banking groups are expected to report a combined net profit of ¥1.7 trillion for the business year ended March, close to the level recorded prior to the collapse of Lehman Brothers Holdings Inc. in autumn 2008, indicating the industry’s improving business conditions, according to industry sources.

But the likely size of the financial conglomerates’ profits in the current business year through March 2012 remain unclear given the worsening prospects for the Japanese economy following the March 11 earthquake and tsunami that devastated the nation’s northeast.

Mitsubishi UFJ Financial Group Inc. appears to have surpassed its ¥500 billion net profit goal for fiscal 2010, while Mizuho Financial Group Inc. is expected to report less than the ¥500 billion it had forecast, according to the sources.

Sumitomo Mitsui Financial Group Inc. said its net profit would be roughly ¥470 billion, down from its earlier forecast of ¥540 billion.

Both Sumitomo Mitsui and Mizuho are taking evaluation losses on holdings of Tokyo Electric Power Co. shares, which have been battered in the aftermath of the quake and tsunami that crippled one of the utility’s Fukushima No. 1 nuclear power plant.

Sumitomo Mitsui Trust Holdings Inc., created in April in a merger between Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc., is expecting a net profit of roughly ¥130 billion based on the projections of the merged firms.

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