TOKYO — Mitsubishi UFJ Financial Group Inc. Tuesday reported net losses in the fiscal year ended March, the last of Japan's top three banks to slip into the red due to the country's economic downturn and weak stockmarkets. But the bank said it expects to post a net profit this year, as the economy picks up.
Hurt by increased bad loans and sizable losses on its equity holdings, Japan's largest bank by assets posted a net loss of Y256.95 billion for the 12 months to March, compared with a Y636.62 billion net profit a year ago.
Group operating revenue for the just-ended year decreased 11% to Y5.677 trillion from Y6.394 trillion.
The figures are based on Japanese accounting standards.
Still, the bank said that for the current year ending March, it expects a group net profit of Y300 billion due to a gradual economic recovery. The group didn't disclose its revenue outlook due to the uncertain business climate.
It plans to pay a dividend per share of Y12 this fiscal year after paying Y12 for the just ended year.
Net Profit Below Forecast
The net profit figures for the year to March were in line with the Y260 billion loss forecast that the bank made earlier this month, but wider than the consensus loss forecast of Y243.8 billion compiled by Thomson Reuters based on 17 analysts' estimates.
Taken together, Japan's three megabanks, Mizuho Financial Group Inc. (8411.TO), Sumitomo Mitsui Financial Group Inc. — both of which already posted losses Friday — and MUFG have recorded Y1.22 trillion in losses — the highest ever total in six years. MUFG was formed from the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. in 2005.
MUFG Tuesday booked credit costs — or reserves set aside for bad loans — worth Y608 billion for the just ended year, compared with Y304 billion a year earlier. With corporate borrowers suffering from the turmoil in global financial markets, Japanese banks have been forced to tackle bad loans by setting aside increased loan loss reserves.
Credit costs will likely continue to be at high level this year, MUFG's president and chief executive, Nobuo Kuroyanagi said at a briefing Tuesday. "The risk of corporate bankruptcies still remains given the current economic outlook," he said.
The bank suffered losses of about Y480 billion from its equity holdings for the fiscal year, and also booked losses of Y267 billion from its exposure to securitized products, including residential mortgage-backed securities.
Japanese banks don't disclose third-quarter figures. But according to a calculation by Dow Jones Newswires based on its nine-month financial report, MUFG suffered a group net loss of Y214.9 billion in the January-March period.
MUFG said its core tier one capital ratio, which is closely watched in the market as financial regulators become stricter regarding capital requirements, stands at 4.53%. The bank didn't disclose its tier one figure last year.
While not clearly defined, core tier one capital usually refers to common stock and retained earnings, excluding preferred shares, preferred subscription securities and deferred tax assets.
Japanese banks have been moving to scramble for capital via common share issuance to improve a capital quality. MUFG raised capital of Y400 billion in December by issuing common shares. Japan's third largest by assets, Sumitomo Mitsui and second ranked Mizuho also said they plan to raise capital, Y800 billion and Y600 billion, respectively.