3RD LD: SMFG slashes FY 2008 group net profit forecast.
(EDS: ADDING INFO AT 6TH AND 8TH GRAFS)
Sumitomo Mitsui Financial Group Inc. said Wednesday it has downgraded its earnings estimates for the current business year through March due to fallout from the global financial turmoil, expecting a 180 billion yen group net profit, compared with 480 billion yen estimated in May.
SMFG, one of Japan's three mega-banking groups, also said its core banking unit, Sumitomo Mitsui Banking Corp., will obtain a 2 percent stake in South Korea's biggest banking group, KB Financial Group Inc., sometime next year for a value currently estimated at 20 billion yen.
Citing rising loan-loss provisions as well as declining latent profit in its stock investments, SMFG cut the estimates for its fiscal 2008 pretax profit to 480 billion yen from 850 billion yen and operating revenues to 3.7 trillion yen from 3.9 trillion yen.
It marked a loss of over 10 billion yen related to the bankruptcy of U.S. securities house Lehman Brothers Holdings Inc.
For the six months through September, the group said, its net profit appears to have come to 85 billion yen, compared with the earlier estimated 210 billion yen. Pretax profit is projected at 190 billion yen, down from 380 billion yen, and operating revenues at 1.85 trillion yen, unchanged from the earlier forecast.
SMBC concluded a business tie-up with Kookmin Bank, the core unit of KBFG, in March last year, and the two banks have collaborated in fund procurement and syndicate loans. The South Korean bank moved to a holding company last month.
The envisaged capital alliance between the two major financial groups in Japan and South Korea is expected to help bolster their businesses in Asia, an SMBC official said. They are eyeing cooperation in fields such as sharing information on companies they would lend to.
Among other major Japanese banking groups, Mizuho Financial Group Inc. concluded capital tie-up agreement with Shinhan Financial Group Co., the second-largest banking group in South Korea.
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|Publication:||Japan Weekly Monitor|
|Article Type:||Financial report|
|Date:||Nov 3, 2008|
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