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2ND LD: MUFG records 1st net loss in FY 2008, eyes profit in FY 2009.

TOKYO, May 19 Kyodo


Mitsubishi UFJ Financial Group Inc. on Tuesday reported its first red ink since the group's launch in 2005 amid the turmoil in global financial markets, but said it is aiming to return to profit by next March.

Japan's largest banking group incurred a group net loss of 256.95 billion yen for the year that ended March 31, in stark contrast to its year-earlier profit of 636.62 billion yen, while annual revenue fell 11.2 percent from fiscal 2007 to 5.68 trillion yen.

For the current fiscal year through March 2010, MUFG is expecting a net profit of 300 billion yen.

With the result, four of Japan's top six banking groups -- MUFG, Mizuho Financial Group Inc., the second largest, No. 3 lender Sumitomo Mitsui Financial Group Inc. and Chuo Mitsui Trust Holdings Inc. -- have now reported falling into the red in fiscal 2008 as bad-loan disposal costs and equity investment losses surged amid the global financial crisis.

''The biggest incident in the previous fiscal year was definitely the Lehman shock,'' MUFG President Nobuo Kuroyanagi said at a press conference, referring to the financial and economic turbulence after the collapse of Lehman Brothers Holdings Inc. of the United States in September. ''Things have frozen since then and everything has moved unexpectedly.''

He said the Japanese economy is likely to recover gradually hereafter, which will help MUFG to return to the black in the current fiscal year. But the banking group is likely to continue booking a large amount of bad-loan disposal costs as bankruptcies are likely to remain at a high level.

In fiscal 2008, MUFG saw its bad-loan disposal cost roughly double from a year earlier to 608.46 billion yen while its losses linked to equity investments ballooned from 24.87 billion yen the year before to 408.78 billion yen.

To take the blame for the earnings deterioration, MUFG said it will waive directors' bonuses for fiscal 2008 and cut their salaries and employees' bonuses for fiscal 2009.

MUFG was created through the integration of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. on Oct. 1, 2005.

Last October, the nation's banking industry leader made a $9 billion investment in Morgan Stanley in the wake of the collapse of Lehman Brothers. After examining ways to boost synergies, MUFG and Morgan Stanley agreed in March on a plan to merge their Japanese brokerage units into a new securities company.

Kuroyanagi said MUFG's strategy for brokerage business is based on the alliance with Morgan Stanley. ''It has been a big challenge for us to level up our weak orthodox investment banking businesses overseas, and we intend to focus on this matter,'' he said.
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Publication:Japan Weekly Monitor
Article Type:Financial report
Date:May 25, 2009
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