Ashikaga incurs 66.6 bil. yen net loss on share, loan loss.

TOKYO, May 23 Kyodo

Ashikaga Financial Group Inc., the holding firm controlling Ashikaga Bank, said Friday it incurred a 66.64 billion yen group net loss in fiscal 2002 due to huge stock-related losses and credit costs but will revive a dividend payment on its preferred shares held by the government.

In the year ended March 31, Ashikaga Financial racked up a group pretax profit of 54.55 billion yen on operating revenues of 140.20 billion yen.

The company said it will pay a 4.70 yen per-share dividend on the preferred shares it had floated to the government in 1999, when the government injected 105 billion yen into the capital base of Ashikaga Bank, a struggling regional bank based in Utsunomiya, Tochigi Prefecture.

Under Japanese regulations, preferred shares carry no voting rights but give their holders voting rights in cases where a bank cannot pay a dividend on the shares.

If the preferred shares held by the government in Ashikaga Financial are converted into common shares, the government would become the largest shareholder in the bank.

The holding company said the voting rights obtained by the government when it skipped a dividend payment in fiscal 2001 have been eliminated because it will pay a combined 987 million yen dividend on the preferred shares for the year ended March 31.

Although it incurred the group net loss, it posted a 2.50 billion yen net profit on a parent-only basis in fiscal 2002 on the strength of profits earned by Kitakanto Lease Co., a leasing company, whose results were consolidated into the holding company, enabling it to pay the dividend.

The holding company was set up March 12 when the Ashikaga Bank group made itself into a group of companies controlled by Ashikaga Financial, which came to control both the bank and the leasing company.

The holding company did not provide percentage comparison numbers between its profits and operating revenues and those of Ashikaga Bank because of the just-completed organizational change.

Ashikaga Bank said it took a parent-only loan-loss charge of 31.68 billion yen. In addition, it incurred stock-related losses of 77.68 billion yen, including a 4.40 billion yen appraisal loss on stockholdings.

On a parent basis, Ashikaga Bank said its operating profit -- a core profit from lending and commission business before loan-loss charges and taxes are subtracted, and thus the most important gauge of a bank's profitability -- rose to 48.53 billion yen from the previous fiscal year's 35.61 billion yen.

The holding company said it will skip dividends on common shares, just as Ashikaga Bank did a year earlier.

In the year to next March 31, it expects its group net and pretax balances to return to the black at 6 billion yen and 8 billion yen, respectively, on projected operating revenues of 135 billion yen.