Sumitomo Mitsui profit jumps 25 percent

TOKYO - Major Japanese bank Sumitomo Mitsui Financial Group Inc. booked a 25 percent jump in quarterly profit as climbing stock prices and a slowly improving economy bolstered its bottom line.

The third-largest of Japan's "megabanks" Thursday reported a net profit of 58.1 billion yen for the three months ended June 30, up from 58.1 billion a year earlier.

Revenue fell 20 percent to 765 billion yen, but operating profit rose 57 percent to 115.2 billion yen.

The results show the bank, known as SMFG, is on track to return to the black this year after booking its first annual loss in four years.

Japanese banks often hold equity stakes in companies to strengthen business ties — a practice that led to massive losses last year for the entire sector as stock prices plunged worldwide.

In the three months to June 30, the Dow Jones Industrials Average jumped 11 percent while Japan's benchmark Nikkei 225 stock average soared almost 23 percent.

Its equity losses eased, and it benefited from government credit guarantees to smaller borrowers. The bank also booked gains on bond and derivatives trading.

SMFG kept its forecasts for the fiscal year through March 2010. It continues to expect net profit of 220 billion yen on revenue of 3.4 trillion yen.

Separately, Sumitomo Trust & Banking Co. said it will buy Nikko Asset Management Co., a Japanese arm of Citigroup Inc. in a deal valued at $795 million.

The move to sell the 64 percent stake in Nikko Asset Management is part of Citigroup's bigger plan to reduce holdings in Japan and restructure the struggling U.S. bank.

Citi had announced previously it was selling its brokerage business in Japan to SMFG, which hopes to bolster its securities operations.

Shares of SMFG rose 1.5 percent to 4,030 yen Thursday on the Tokyo Stock Exchange, which closed before the company released its earnings. The benchmark Nikkei 225 index edged up 0.5 percent to 10,165.21.

The bank reports earnings based on Japanese accounting standards.

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