5 major banks report profits, Mizuho in red for April-June

TOKYO, July 31 Kyodo -
Five of Japan's top six banking groups, including industry leader Mitsubishi
UFJ Financial Group Inc., posted net profits for the April-June quarter amid
easing global financial turmoil, but Mizuho Financial Group Inc. was in the red
due to a rise in appraisal losses on financial products, according to their
financial results released by Friday.
Mizuho, Japan's second-largest banking group by assets, incurred a group net
loss of 4.49 billion yen in the April-June period, a reversal from a
year-earlier profit of 132.99 billion yen and its first loss for the quarter
since it initiated quarterly earnings reports in 2004. Its appraisal losses on
financial products expanded along with swelling bad loans.
Mitsubishi UFJ reported a group net profit of 75.94 billion yen for the first
quarter of fiscal 2009 that started April 1, up 48.3 percent from a year
earlier, while the nation's No. 3 lender Sumitomo Mitsui Financial Group Inc.
said its group net profit rose 25.3 percent to 72.77 billion yen.
Their three smaller peers -- Resona Holdings Inc., Sumitomo Trust & Banking
Co., Chuo Mitsui Trust Holdings Inc. -- also reported profits for the quarter.
Resona said its group net profit fell 33 percent to 54.71 billion yen while
Sumitomo Trust said its net profit declined 5.8 percent to 12.20 billion yen.
Chuo Mitsui's net profit fell 1.5 percent to 9.53 billion yen.
Japanese banks' earnings deteriorated sharply the previous fiscal year due to
surging bad loan disposal costs and losses on equity holdings amid the global
financial crisis.
But since a measure of calm has been restored to financial markets, trading in
stocks and bonds helped boost their earnings in the first quarter.
Mitsubishi UFJ, which made a $9 billion investment in Morgan Stanley, returned
to the black after posting heavy losses in the January-March quarter, also with
help from gains from making Acom Co. into a consolidated subsidiary.
The Japanese financial giant cited signs of recovery in the global economy,
saying, ''The United States and Europe have passed through the worst of the
recession aided by unprecedented fiscal and monetary policy measures.''
Meanwhile, Mizuho was hit hard by its large amount of holdings of credit
default swaps, a financial instrument designed to cover some loan losses, which
dealt a heavy blow to its earnings as their values declined on a lull in the
financial crisis. Mizuho's appraisal loss on such credit derivatives totaled
60.6 billion yen during the period.
Despite the earnings recovery at some banks, the business environment remained
severe. Many borrower companies' earnings remained sluggish amid the prolonged
recession, leading Mizuho to incur 76 billion yen in bad loan disposal losses,
about 16 times more than a year earlier, while Mitsubishi UFJ saw similar costs
swelling 46.7 billion yen to 189.8 billion yen.
All the banks, including Mizuho, maintained their earnings forecasts for the
whole of fiscal 2009 ending next March.
Mizuho is projecting a group net profit of 200 billion yen against a loss of
588.81 billion yen in the previous year, its first red ink in six years.
Mitsubishi UFJ expects 300 billion yen in group net profit for fiscal 2009
while Sumitomo Mitsui eyes a net profit of 220 billion yen.
For the entire fiscal 2009, Resona is projecting a net profit of 100 billion
yen, Sumitomo Trust 45 billion yen and Chuo Mitsui 30 billion yen.
==Kyodo