Tokyo, May 22 : Mitsubishi UFJ Financial Group, the world's biggest bank by assets, posted an annual profit of 1.18 trillion yen (.52 billion) on Monday but forecast its earnings will slip this year as Japan's banks have largely tapped excess loan reserves that inflated recent profits.
Group net profit at MUFG, which was created in a merger last October, compared with a combined 216 billion yen loss for its two predecessor banks in 2004/05 and but fell short of the 1.22 trillion yen average projection of 12 analysts polled by Reuters Estimates.
The bank had estimated earlier that its net profit for the business year ended March 31 would total 1.17 trillion yen. For the current year it forecast a profit of 750 billion yen, compared with analysts' consensus figure of 926 billion yen.
Earnings at MUFG and other banks have been boosted by a massive shift in excess loan reserves to their bottom lines.
Those reserves, originally set aside to cover borrower defaults, have given lenders a temporary profit boost, but the excess has now mostly been used up and profits are likely to decline this year.
MUFG and its peers have enjoyed other, more sustainable gains, however. Income from lending has stabilised after a long decline, while revenue from fees and commissions has surged, thanks largely to strong demand for retail investment trusts.
A booming stock market, meanwhile, has lifted the value of banks' share portfolios and boosted profits from trading.
Japan's banks have been on the mend since 2003 thanks to a stronger economy and efforts to clear up problem debts.
Net profit at the six major groups, all of which report this week, likely surpassed 3 trillion yen (.75 billion) in 2005/06, four times the previous year's total and beating the peaks set in the boom years of the 1980s.
Shares in MUFG jumped 93.5 percent in the year ended in March, beating a 66 percent gain in the sector as a whole IBNKS.
Reuters
Group net profit at MUFG, which was created in a merger last October, compared with a combined 216 billion yen loss for its two predecessor banks in 2004/05 and but fell short of the 1.22 trillion yen average projection of 12 analysts polled by Reuters Estimates.
The bank had estimated earlier that its net profit for the business year ended March 31 would total 1.17 trillion yen. For the current year it forecast a profit of 750 billion yen, compared with analysts' consensus figure of 926 billion yen.
Earnings at MUFG and other banks have been boosted by a massive shift in excess loan reserves to their bottom lines.
Those reserves, originally set aside to cover borrower defaults, have given lenders a temporary profit boost, but the excess has now mostly been used up and profits are likely to decline this year.
MUFG and its peers have enjoyed other, more sustainable gains, however. Income from lending has stabilised after a long decline, while revenue from fees and commissions has surged, thanks largely to strong demand for retail investment trusts.
A booming stock market, meanwhile, has lifted the value of banks' share portfolios and boosted profits from trading.
Japan's banks have been on the mend since 2003 thanks to a stronger economy and efforts to clear up problem debts.
Net profit at the six major groups, all of which report this week, likely surpassed 3 trillion yen (.75 billion) in 2005/06, four times the previous year's total and beating the peaks set in the boom years of the 1980s.
Shares in MUFG jumped 93.5 percent in the year ended in March, beating a 66 percent gain in the sector as a whole IBNKS.
Reuters
Oneindia Login