Japan's biggest financial groups, Mitsubishi UFJ, Mizuho and Nomura, on Friday posted strong first quarter earnings results on the back of an economic recovery that shrank bad-loan costs. Leading banking group Mitsubishi UFJ Financial said net profit more than doubled in the April-June period to 166.35 billion yen (1.9 billion dollars). Revenue was down 12.5 percent to 1.17 trillion yen.
It said it benefited from a decline in bad loan reserves, or money set aside to compensate for potential debt turning sour, as there were fewer bankruptcies in Japan. MUFG kept its full fiscal year forecast unchanged and expects to clock in a net profit of 400 billion yen.
The bank is reportedly looking for a new US acquisition after buying a 21-percent-stake in Morgan Stanley following the collapse of US investment bank Lehman Brothers and the ensuing global financial crisis. Meanwhile Mizuho Financial Group, Japan's second biggest bank by assets, also said it swung into the black in the same quarter. It said net profit was 150 billion yen from a 4.5-billion-yen loss the previous year when losses on derivatives trading ate into its bottom line. Revenue was up 1.3 percent at 713 billion yen. Despite the rosy figures the bank warned of uncertainty ahead.
"There remains a risk that the current recovery may stall" as government stimulus measures wear off and because of debt concerns in Europe, it said in a statement. The bank has been issuing shares in order to strengthen its capital base in anticipation of tougher banking rules. It issued six billion shares worth 751 billion yen earlier this month. It maintained its forecast and expects net profit to rise 79.6 percent to 430 billion yen for the full fiscal year ending in March 2011.
Top brokerage firm Nomura Holdings said net profit plunged nearly 80 percent in the first quarter due to a slump in trading and investment banking fees. Still, the result marked the group's fifth straight quarter in the black. Net profit stood at 2.3 billion yen in the April-June quarter from the previous year with total revenue down 14 percent to 314 billion yen, the brokerage said.
Nomura in 2008 snapped up the Asian, European and the Middle Eastern operations of Lehman Brothers. The deal transformed Nomura into a top global player and marked a sea change for Japan's once risk-averse banks. The lender is reportedly offering jobs to 40 college graduates at triple the normal starting salary for a Japanese bank, bringing it roughly in line with what Lehman paid its graduates before its bankruptcy in September 2008. The bank also said it would buy back two percent of its own shares for up to 50 billion yen to secure enough shares for a stock option programme. As usual, Nomura did not give any earnings forecasts.