Mitsubishi UFJ suffers quarterly loss but predicts rapid return to profit

JAPAN’S largest bank, Mitsubishi UFJ, (MUFG) reported a $2.2bn (£1.4bn) quarterly loss yesterday, hit by the recession and hefty losses on its stockholdings, but forecast a return to profit.

MUFG and its rivals have lost billions of dollars from rising bad loans and a slide in the value of their massive stock portfolios. Japanese banks traditionally buy stakes in their clients to seal business ties, making them sensitive to equity prices.

Credit costs, including provisions to cover bad loans, have increased sharply as the world’s second-largest economy is battered by its worst recession since World War Two. But MUFG is expecting a recovery this year, helped by a recent upswing in the stock market.

“It’s a given that they will be in the black,” said Ismael Pili, an analyst at Macquarie Capital Securities in Tokyo.

“If last year was all about higher equity losses, this year will be about higher provisions but the provisions will not be sufficiently high enough to push them into the red.”

MUFG, which last year paid $9bn for a 21 per cent stake in US investment bank Morgan Stanley, reported a January to March group net loss of 214.9bn yen ($1.4bn). The bank made 322bn yen a year earlier. For the full year, MUFG lost a total of 256.95bn yen, its first annual loss since the group was formed in 2005.