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Mizuho trims problem loans
(CNN) -- Japan's biggest banking group, Mizuho Financial Group, has trimmed its outstanding bad loans to 4.68 trillion yen ($39.18 billion) at June 30, down from 4.79 trillion yen ($40.11 billion) at March 31. Mizuho and other big Japanese banks are attempting to clean up their loan books under government pressure. Problem loans in the Japanese banking system are thought to total more than 40 trillion yen (about $340 billion). In May, the top banks reported losses of almost $40 billion in the 2002-03 financial year, but said they could see better times ahead as they tackle the cost of their problem loans. Mizuho posted a net loss of 2.377 trillion yen ($20.3 billion) for 2002-03, the worst result in Japanese corporate history. But Mizuho said then it expected to rebound this financial year, tipping a group net profit of 220 billion yen. It also plans to write off 340 billion yen in bad loans. The top four banks -- Mizuho Financial Group, UFJ Holdings, Sumitomo Mitsui Financial Group and Mitsubishi Tokyo Financial Group -- expect to post combined net profits of $6 billion in the year to March 2004. The four accounted for almost $31 billion of the losses racked up by the seven largest banking groups in the 2002-03 financial year. Huge losses on their share portfolios, combined with bad loan costs and the stagnant state of the Japanese economy pushed the big banks into the red for a second straight year. On Tuesday, Mizuho said it had latent stockholding profits of 192.9 billion yen at the end of the first quarter of fiscal 2003-04 against latent losses of 194.8 billion yen at the end of the previous fiscal year in March, Reuters reported. The group said it had latent losses on bondholdings of 70.7 billion yen at June 30, swinging from a latent profit of 87.4 billion yen at March 31. Mizuho stock is up 1.8 percent to 110,000 yen in Tuesday afternoon trade, out-performing a rise of 0.2 percent for the broader market. Mizuho's quarterly results followed a similar pattern to those of other top banks that have already reported, according to Reuters. This showed they had benefited from a 14 percent jump in Japan's stock market in the April-June quarter but took a hit from a fall in Japanese government bond prices from record highs. Mizuho said it expected a key gauge of its financial health, its capital adequacy ratio, to be around 10 percent at the end of September from 9.53 percent at the end of March. Reuters quoted analysts as saying it was too early to measure the impact of the banks' efforts to get non-performing loans off their balance sheets. They did not expect the quarterly results to have a big impact on share prices.
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