Japan’s largest bank MUFG doubles quarterly profits as lending costs fall

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People line up at a branch of Tokyo-Mitsubishi UFJ Bank of Mitsubishi UFJ Financial Group (MUFJ) in Tokyo, Japan on February 1, 2016. REUTERS / Yuya Shino / File Photo

  • First quarter net profit at 383.1 billion yen from 183.5 billion a year earlier
  • Credit costs 5.1 billion yen against 145 billion yen a year earlier
  • Maintains full-year net profit forecast at 850 billion yen

TOKYO, Aug.2 (Reuters) – Mitsubishi UFJ Financial Group Inc (MUFG) (8306.T), Japan’s largest lender by assets, on Monday reported that first quarter net profit had doubled by one year on the other, the costs linked to credit have fallen sharply.

MUFG, which owns about 20% of Wall Street investment bank Morgan Stanley (MS.N), reported profit of 383.1 billion yen ($ 3.49 billion) for the three months ended 30 June, up from 183.5 billion yen a year earlier.

The bank kept its annual profit forecast of 850 billion yen. That compares to an average forecast of 859 billion yen from nine analyst estimates compiled by Refinitiv.

Japanese banks are grappling with years of ultra-low interest rates and a declining population. In the past year, three major lenders, including MUFG, collectively recorded 1.1 trillion yen in credit-related costs, which nearly doubled year-over-year, amid the COVID pandemic -19.

MUFG’s lending costs in the first quarter were 5.1 billion yen, compared to 145 billion yen in the same period last year.

The lender had estimated the costs related to the credit at 350 billion yen for the current fiscal year, which runs until March.

In contrast, net interest income – mostly derived from its traditional lending business – amounted to 496.9 billion yen for the quarter, marking a 5.9% increase year-on-year as corporate clients rushed to borrow to overcome the fallout from the pandemic.

Peers Sumitomo Mitsui Financial Group Inc (8316.T) and Mizuho Financial Group Inc (8411.T) both said last week that their net profit for the quarter more than doubled due to lower credit-related costs. .

($ 1 = 109,6400 yen)

Reporting by Takashi Umekawa; Editing by David Goodman and Sonali Paul

Our standards: Thomson Reuters Trust Principles.


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