Japanese big banks report heavy losses


UFJ reported a loss of almost $10 billion for the year than ended March 31

Staff and wires

TOKYO, Japan -- Japanese big banks reported huge losses Friday for the year that ended on March 31, with UFJ Holdings posting a loss of almost $10 billion.

Mizuho Holdings lost $7.8 billion, Daiwa Bank lost $7.4 billion, Sumitomo Mitsui Banking Corp lost $2.58 billion and Mitsubishi Tokyo Financial Group reported a loss of about $1.2 billion.

Japanese banks are weighed down by billions of dollars in bad loans.

That in turn has strangled the growth prospects of the world's No. 2 economy, which reported three straight quarters of economic contraction in the nine months to December 2001.

However, there are signs the Japanese economy is recovering, with private sector think tanks suggesting there was growth of 2.2 percent in the first quarter of this year.

A pickup in exports last month -- the first year-on-year gain in 13 months -- is adding to the more confident mood in Tokyo, as is the central Bank of Japan's latest economic outlook suggesting the economy has stopped deteriorating.

Profit forecasts


Mizuho and other big Japanese banks are hoping to return to profit this financial year

That in turn holds out the prospect of a return to profit for the banks this year.

UFJ Holdings in fact is forecasting a group net profit of 130 billion yen ($1.04 billion) for the year to next March. That follows its group net loss of 1.23 trillion yen ($9.84 billion) for the year ended March.

Mizuho Holdings reported a loss of 976 billion yen ($7.8 billion) in the year just completed, and said it was predicting a profit of about 210 billion yen ($1.68 billion) this financial year.

Sumitomo Mitsui Banking Corp said its parent-only result was a loss of 322.85 billion yen ($2.58 billion), while its outlook is for a profit of 80 billion yen ($640 million) in the year to next March.

Mitsubishi Tokyo Financial Group, another of the top 4 banking groups, said its loss was 152.32 billion yen ($1.22 billion). It sees a profit of 55 billion yen ($440 million) in the year ahead.

Daiwa Bank Holdings, the No. 5 bank, reported a group net loss of 931.88 billion yen ($7.4 billion) for the year just ended and says it expects a profit of 50 billion yen ($400 million) in the year to next March.

The bank also said it had a total of 3.36 trillion yen ($26.9 billion) of problem loans at the end of March, based on disclosure standards set under Japanese banking laws.

For its part, UFJ's outstanding problem loans at the end of March surged to 6.48 trillion yen ($51.8 billion). It said it expected loan-loss charges this year to fall sharply to 480 billion yen ($3.84 billion) from 1.95 trillion yen in 2001-02.

Although regulators have prodded banks to get tougher with ailing firms, many economists believe Japanese banks are still seriously underestimating the extent of non-performing loans.

Analysts also warn that in the months ahead, the banks will have to tread a fine line between raising interest rates to better reflect risks and charging so much that weak borrowers go to the wall.

Shares rebounding

Shares in the big four banks, which at one point shed as much as 80 percent of their peak value during the last business year, have rebounded since the new year started in April on receding concerns about a financial meltdown.

UFJ closed Friday down 2.08 percent at 377,000 yen compared with a 0.22 percent gain by in the capital-weighted Topix index.

Mizuho Holdings eased 0.33 percent to 301,000 yen, Sumitomo Mitsui Banking Corp was down 0.58 percent to 690 yen and MTFG jumped 2.42 percent to 975,000 yen.