The economic recession and tumbling stock market
forced most of Japan's major banking groups to report losses in the
business year that ended in March.
On Tuesday, Mitsubishi UFJ Financial Group Inc. reported a group
net loss of ¥256.9 billion in the 2008 business year, in stark
contrast with the net profit of ¥636.62 billion it posted a year
earlier.
MUFG said it spent ¥608.4 billion to write off bad loans for the
year, while its shareholdings took a ¥408.7 billion hit. For the
current year to March 2010, it is forecasting a net profit of ¥300
billion.
While banks are not likely to suffer further heavy losses this year
from their shareholdings, some analysts predict ongoing economic
stagnation may weigh on the lenders as they write off further bad
debts.
"With some exceptions, banks went deep into the red for the first
time in several business years," said Masahiko Watanabe, senior
director at Fitch Ratings Ltd.
Watanabe said the financial crisis triggered deterioration of the
real economy, which increased corporate bad loans.
He also pointed out that falling stock prices hurt the banking
groups, which continue to own substantial shares in their trading
companies.
The combined credit costs for the three main banking groups reached
¥1.86 trillion, up from ¥580.6 billion a year earlier.
Mizuho Financial Group Inc. booked ¥539.3 billion in credit costs
and logged ¥444.2 billion in losses from tumbling stock prices.
Sumitomo Mitsui Financial Group Inc. said it incurred ¥550 billion
in credit costs and ¥223.1 billion in losses from its
shareholdings.
Resona Holdings Inc. posted credit costs of ¥163.9 billion.
As a result, the combined net loss of the four banking groups
reached ¥1.2 trillion. Only Resona posted a net profit of ¥123.9
billion.
Watanabe said business results for the banking groups in business
2009 will largely depend on economic conditions. "Everyone is
hoping for a recovery in the latter half of the year," he said.
Watanabe said the worsening economy could put further pressure on
banks with nonperforming loans, leading to a dropoff in lending and
further deterioration of corporate businesses and more
restructuring.