Tokyo, May 15
Japan’s biggest lenders on Tuesday reported across-the-board surges in annual profits, with megabank Mitsubishi UFJ Financial Group posting a 68 percent spike on trading and one-time gains.
Mitsubishi UFJ, the nation’s largest bank, said its net profit came in at a hefty 981.33 billion yen ($12.28 billion) in the fiscal year through March, compared with a 583.08 billion profit in the year-earlier period.
The firm, which also said revenue rose 9.2 percent to 4.95 trillion yen, reported that its earnings spike was due to lower credit costs, bond-trading gains and a one-time boost related to its holding in US-based Morgan Stanley.
In June, the Tokyo lender switched its 22 percent ownership stake to common shares from preferred shares, pulling in 290 billion yen from the conversion.
Mitsubishi UFJ owns the chunk of Morgan Stanley after throwing a $9.0 lifeline to the troubled Wall Street giant in 2008 during the financial crisis.
On Tuesday, Mitsubishi said its exposure to debt-hit Europe was minimal, with "limited" activity related to the continent’s banks and no holdings of Greek or Irish government bonds.
"(Our) exposures to Spain and Italy were mainly towards the infrastructure sector, such as electricity, gas and telecommunications," it said.
"(There were) limited exposures to financial institutions."
Rival Mizuho Financial Group on Tuesday said it posted a 17.2 percent rise in full-year net profit to 484.52 billion yen for the fiscal year through March, largely due to improved credit-related costs.
Sumitomo Mitsui Financial Group, meanwhile, said its full-year earnings rose 9.0 percent -- helped by an increase in loans-related commissions and lower credit-card costs -- to 518.54 billion yen.
The trio’s combined net profits totalled nearly 2.0 trillion yen, the largest since the global financial crisis.
But the figures weren’t rooted in their core banking business of lending, but rather factors including gains from sales of Japanese government bonds, which lenders have relied on for returns amid sluggish loan demand.
Analysts said a decline in net profit is likely for the current fiscal year, which Mitsubishi UFJ confirmed for its own part, saying it expects net profit to fall to 670 billion in the current fiscal year through March 2013.
Sumitomo also forecasted a 7.4 percent percent fall in net profit this fiscal year, although Mizuho said its expects net profit in the same period to rise to 500 billion yen.
Japanese banks have been ramping up their overseas operations at a time when European financial institutions have been forced to scale back their businesses as markets fret about the eurozone’s fiscal woes.
Among that expansion, Mitsubishi UFJ, which has a presence in the United States through its retail banking unit California-based Union Bank, agreed to acquire Pacific Capital Bancorp for about $1.5 billion in March.