Japan Megabanks Hit by Subprime Losses

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TOKYO — Profits fell at Japanese megabanks Mitsubishi UFJ Financial Group and Mizuho Financial Group in the nine months through December because of exposure to the U.S. subprime mortgage crisis.

With mortgage-related losses double its estimate in November, Mizuho said Thursday it was lowering its earnings projection for the fiscal year ending March 31.

Mitsubishi UFJ, Japan's largest banking group by assets, posted a net profit of 315 billion yen ($2.95 billion) in the nine months ended Dec. 31, down 54.4 percent from 691 billion yen in the same period a year earlier.

The company said it incurred losses of 55 billion yen ($515.17 million) from exposure to subprime loans and structured investment vehicles that sell short-term investments based on assets, such as property.

Its sales rose 10.4 percent to 4.76 trillion yen ($44.58 billion), compared with 4.31 trillion yen a year earlier for the April-December period. It did not break down quarterly figures.

MUFG left unchanged its earnings outlook for the full year, with its group net profit forecast at 600 billion yen ($5.62 billion).

Meanwhile, Mizuho Financial Group Inc. said its net profit fell 32.2 percent on year in the nine months through Dec. 31 as its securities unit suffered a huge decline from mortgage exposure.

Mizuho, Japan's No. 2 bank by market capitalization, said its net income tumbled to 393 billion yen ($3.68 billion) for the April-December period, down from 580 billion yen in the same period last year.

Sales for the period rose 19.8 percent to 3.43 trillion yen ($32.12 billion), the bank said. It did not issue separate figures for the most recent quarter.

Mizuho Financial Group suffered a loss of 345 billion yen ($3.23 billion) from the U.S. mortgage loan crisis for the nine months through December, two-thirds of that at its brokerage unit, Mizuho Securities. That was double the 170 billion yen loss Mizuho had estimated in November for the nine-month period.

It now estimates profits for the full year through March 31 at 630 billion yen ($5.90 billion), down from an earlier estimate of 830 billion yen ($7.77 billion) in profit.

Mizuho shares rose 0.6 percent to 498,000 yen, while MUFG shares rose 0.4 percent to 1,033 yen on the Tokyo Stock Exchange.

The companies announced financial results after the market closed.

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