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Profits, bad debts fall at Sumitomo Mitsui, Mizuho

TOKYO - Sumitomo Mitsui Financial Group Inc and Mizuho Financial Group Inc have announced Monday that their group net profits fell in the first half ended September 30, but that their bad-loan ratios were also down by more than half from the levels seen in 2002.

Sumitomo Mitsui's group net profit dropped 62.8% on the year to 53.3 billion yen (US$515.2 million).

A loss from writing off bad loans of Sumitomo Mitsui Banking Corp rose to 455.7 billion yen, about 200 billion yen more than the bank had projected at the start of the current fiscal year, as a result of building up reserves for loans to some troubled big borrowers. Core business profit fell 5.6% to 471.5 billion yen.

Mizuho's group net profit declined 8.4% to 233.9 billion yen, topping the 140 billion yen profit it had forecast at the start of the current fiscal year.

The two financial groups were able to achieve the government-set goal of halving the ratio of bad loans to total loans from the level in 2002 by the end of March 2005.

The balance of bad loans at Sumitomo Mitsui Banking came to 2.48 trillion yen as of September 30, down about 320 billion yen in six months, reducing the bad-loan ratio to 4.4% - less than half of the 8.9% figure of March 31, 2002.

Sumitomo Mitsui Banking will aim to reduce the ratio to the 3% level by March 31, 2005.

Meanwhile, the balance of bad loans of Mizuho's three core banks totaled 2.22 trillion yen, down nearly 1 trillion yen in six months. The bad-loan ratio fell to 3.1%, compared with the 6.4% of Sept. 30, 2002, which was the highest since March 31, 2002.

For all of fiscal 2004, Sumitomo Mitsui kept its 180 billion yen group net profit projection intact and Mizuho raised its group net profit projection to 440 billion yen.

(Asia Pulse/Nikkei)

Nov 25, 2004

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