Suruga Bank is expected to make a large downward revision to its annual financial results released in May, informed sources said Monday.
The regional bank said it is considering hiking the amount of reserves set aside to cover potential losses on loans related to share-house investments.
The lender based in Numazu, Shizuoka Prefecture, said last month that consolidated net profit fell 50.5 percent on year to ¥21.065 billion in the year ended March.
It is rare for a publicly traded company to revise financial results that have already been disclosed. Suruga Bank is listed on the first section of the Tokyo Stock Exchange.
The bank had ¥203.587 billion in outstanding share-house-related loans as of the end of March, including those for investing in houses offered by Smart Days Inc., which went bankrupt in April.
Suruga Bank has been accused of falsifying screening documents related to share-house loans. It is also suspected of being involved in similar misconduct related to apartment loans, informed sources said.
The bank loaned money to investors interested in buying share houses from Smart Days, which promised to make pay them “rent.” But the company halted the payments due to financial difficulty, leaving many owners unable to pay off their loans.