MUFG posts record $6 billion profit

Newly created banking giant Mitsubishi UFJ Financial Group (MUFG) posted first-half profit of $6 billion on Thursday, stronger than expected and the largest ever for a Japanese firm, helped by a sharp fall in the cost of cleaning up problem loans.
The striking earnings at the world's biggest bank by assets capped a week of record profit results for Japan's big banks. On life support for much of the last decade, they have rebounded thanks to a better economy and efforts to clean up a mountain of soured debts.
"Japanese financial institutions need to get bigger to meet challenges posed by US and European banks," MUFG President Nobuo Kuryanagi told a news conference.
Japanese banks still lag their foreign peers in sustained profit-generating power, and Kuroyanagi acknowledged that about a third of MUFG's profit came from temporary factors such as unused reserves against potential loan defaults. "We still have a way to go to meet our goal of being one of the world's most profitable banks on a stable basis," he said.
Net profit at Mitsubishi Tokyo Financial Group and UFJ Holdings, which merged to form MUFG on October 1, totalled 711.8 billion yen ($6 billion) in the six months to September 30, well above MUFG's recently upgraded estimate of 635 billion yen.
Although earned before the merger by two separate companies, the combined profit was a half-year record for a Japanese firm and beat the 570.5 billion yen total reported this month by Toyota Motor Corp, Japan's perennial profit leader.
MUFG capped a week in which Japan's six major banking groups reported an unprecedented 1.7 trillion yen in six-month profits.
All but fourth-ranked Resona Holdings posted profit gains, and all but Mitsui Trust Holdings, the sixth largest, raised their full-year forecasts. Resona suffered by comparison with last year, when it booked a big one-time securities-related gain, while Mitsui Trust had already issued an upbeat annual forecast in May.
Japanese bank shares have soared in recent months as investors bet that the country's economic rebound will generate fresh demand for loans and push interest rates up from their near-zero levels, boosting banks' paltry lending margins.
Major bank shares climbed an average 44.6 percent in the April-September half, and the sector sub-index, which includes smaller regional lenders, rose 35.2 percent.
The benchmark Nikkei average rose 16.3 percent during the same period.