Japan's top banks post losses

Mizuho Financial Group Inc, Japan's second-largest bank, posted a group net loss of 588.8 billion yen (S$9.09 billion) for the fiscal year ended March, swinging from a 311.2 billion yen profit a year earlier. --PHOTO: AP

TOKYO - TOP Japanese banks tumbled to steep annual losses, hit by bad loans and plunging share prices, but said on Friday that they expect to turn a profit this fiscal year.

Mizuho Financial Group Inc, Japan's second-largest bank, posted a group net loss of 588.8 billion yen (S$9.09 billion) for the fiscal year ended March, swinging from a 311.2 billion yen profit a year earlier. It was Mizuho's first annual loss in six years.

Mizuho's smaller rival Sumitomo Mitsui Financial Group Inc, or SMFG, reported a net loss of 373.5 billion yen, down from 461.5 billion yen profit in the previous year.

Japan's major banks managed to weather the US subprime mortgage crisis with far smaller losses than their Western counterparts, but they are now facing the painful impact of of the global recession.

Cross-shareholding arrangements with domestic companies, commonly used to foster business ties, are hurting the banks amid a drop in stock values. Bad loans are also mounting as more companies face bankruptcy.

Japan's three 'megabanks' - Mizuho, SMFG and Mitsubishi UFJ Financial Group Inc - had all projected annual losses, after drastic downgrades of initial profit estimates. Mitsubishi UFJ, now expecting a 42 billion yen loss, is releasing its earnings on Tuesday.

Annual revenue at Mizuho fell 22.3 per cent to 3.51 trillion yen compared with 4.52 trillion yen in fiscal 2007. Revenue at SMFG fell 23.2 per cent to 3.55 trillion yen.

For the fiscal year through March 2010, Mizuho expects a net profit of 200 billion yen, on revenue projected at 3.20 trillion yen. SMFG is projecting a net profit of 220 billion on revenue of 3.4 trillion yen.

But rating company Fitch Ratings lowered credit ratings of SMFG and some of its subsidiary banks, citing 'poorer-than-expected performance' and 'weaker capital quality'. 'The downgrades reflect the impact of a rapidly worsening operating environment,' Fitch said in a statement. -- AP