Japan's largest bank Mitsubishi UFJ Financial Group, Inc. reported a 66 percent slump in fiscal first quarter profit, as US credit-related losses and a slowing domestic economy battered its bottom line. Net profit plunged to 51.195 billion yen ($474.1 million) in the April-June quarter from 151.264 billion ($1.40 billion) the previous year, the company said. Quarterly revenue fell to 1.438 trillion yen from 1.551 trillion yen. MUFG said it lost 16 billion yen during the period from its exposure to securitized products and other related investments, especially risky residential mortgage-backed securities. Its total credit-related costs increased to 141.7 billion yen ($1.31 billion) “due to credit rating changes which reflected a domestic and overseas economic slowdown and deterioration of corporate performance,” the company said. The bank maintained its forecast for nearly flat growth this fiscal year through March 2009. It projects net profit of 640 billion yen ($5.93 billion), a 0.5 percent increase from a year earlier. MUFG's steep earnings drop follows a slew of similarly weak results from other major banks last week, which led to broad share declines in the sector. Major banks fell 5.5 percent during the week, compared with a 1.8 percent drop in the benchmark Nikkei 225 Stock Average, according to Deutsche Securities analyst Shin Tamura. “Expectations for recovering earnings for banks were not high compared with last year, when there were prospects for interest rate hikes, and flagging (net operating profit), higher credit costs, and indications that profits will be disappointing ahead have continued exerting downward pressure on bank stocks,” Tamura wrote in a recent search note. MUFG shares gained 1.55 percent to 915 yen Tuesday on the Tokyo Stock Exchange.
