Mitsubishi UFJ Financial Group (MUFG) on Tuesday reported a 12 percent rise in quarterly net profit, as gains from selling equity holdings and smaller bad loan costs helped offset a weak lending business. Japanese banks typically buy shares of corporate clients to cement ties, but this practice has come under pressure from investors and regulators who want lenders to trim such holdings worth billions of dollars and cut exposure to market swings.
MUFG, Japan's largest lender by assets, said gains from its sale of stock holdings over April to September jumped to 55 billion yen ($483.98 million), from 44 billion yen a year ago. MUFG's net profit came in at 337.9 billion yen for the July-September period, versus 301.6 billion yen a year ago, Reuters calculations based on the bank's six-month results show.
During its first-half, MUFG booked gains of 3.1 billion yen by clawing back provisions set aside in the past for bad loans, while it reported 57.6 billion in bad loan costs a year earlier. Strong results at Morgan Stanley also lifted profits for MUFG, which owns about a fifth of the Wall Street bank. But MUFG's core lending business remained weak with net interest income, or profits from loan interests, falling over the first six months of the year.
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