Major banks facing Y1.5 trillion profit drop due to subprime losses
TOKYO —
Combined net profit at Japan’s six major banks is estimated to have dropped more than 40% for the year to March 2008, weighed down by losses related to U.S. subprime mortgages, a daily said Saturday.
The six banks are Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group Inc, Resona Holdings Inc, Chuo Mitsui Trust Holdings Inc and Sumitomo Trust and Banking Co.
The Nikkei business daily forecast that their aggregate group net profit fell to about 1.5 trillion yen for the year ended on Monday from 2.8 trillion yen a year earlier.
It was the lowest in three years and far below their earlier combined estimate of 2.5 trillion yen, the newspaper said.
The earnings decline is mainly due to the impact of persistent financial market turmoil as their subprime losses have probably expanded to a total of 700-800 billion yen, it said.
At Mizuho, losses related to U.S. subprime mortgages are estimated at 400 billion yen, incurred mainly by Mizuho Securities Co, Nikkei said, adding that the bank was expected to miss its most recent net profit projection of 480 billion yen.
The stock price plunge is also forcing the three mega-banks—Mitsubishi UFJ, Mizuho and Sumitomo Mitsui—to write down the value of their shareholdings, it said.
Among them, write-downs could reach 100 billion yen as the Nikkei Stock Average slumped 27% for the year to March 2008.
Mitsubishi UFJ and Sumitomo Mitsui appear unlikely to meet their most recent projections of 600 billion yen and 570 billion yen, respectively, it added.
AFP
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thepossum
More finger pointing by Japan here. Why doesn't the nation fess up to the obvious fact... That Japanese business people are not wise ! This same thing happened a few years back when Russian markets experienced a sudden change of fortune. J investors lost millions and whined about it the whole time.
This subprime issue in the US seems to have become (A)a scapegoat and excuse for poor investment habits... gee, why didn't the Japanese invest in other parts of Asia which are seeing booming economies ? and (B) a red-herring being used to divert attention from one of Japan's hugest scandals... Ishihara bank !
Sorry Japan, no sympathy here... you sleep in the bed you make.
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Beelzebub
The simple fact is, there is too much money in the world. When animals become overpopulated, they disappear in a mass die-out (or outright extinction). When there's too much money, it loses its value and the corporate CEOs who have bankrupted their companies reward themselves with $64 million as a retirement bonus (as happened with the top man at Bear Stearns).
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rjd_jr
Thepossum, no ones insulting anyone or anything here. No need to get worked up over a simple news fact. It's a fact that the sub prime fiasco has impacted many a nation worldwide. This article is only stating the plain fact that banks are facing a huge loss because of their investments overseas. Simple as that, no ones blaming anyone, nothing "anti American," again, just a simple report that banks in Japan are also affected by the sub prime fiasco. There's absolutely nothing wrong with any news blurb mentionning that. I think people here need to stop reading into every little news blurb as some sort of conspiracy or attack against America, its personnel, and its interests, or those of other non Japanese countries.
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anderstungtwist
Buying a house is not like buying a goose that lays golden eggs as so many U.S. citizens seem to believe.
It's interesting to hear the data for the year ending March 2008, but how much did they make during the bubble? They must have done pretty well from 2002 to 2007 to make up for these losses.
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okapake
But it wasn't a "loss" for the Japan banks, it was a drop in profits! They still made "about 1.5 trillion yen for the year..."
Poor things!
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okapake
By the way, that's $15 billion they made!
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SuperLib
"Buying a house is not like buying a goose that lays golden eggs as so many U.S. citizens seem to believe."
Actually, more often than not, it is...
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