Top Japanese bank Mitsubishi UFJ Financial Group reported a 66 percent slide in first-quarter profit, hurt by more credit-related losses and a sputtering domestic economy, and stuck to its forecast for virtually no growth this year.
Mitsubishi UFJ said on Tuesday it lost 16 billion yen ($147.9 million) on investments backed by U.S. subprime mortgages and other securitised products in the April-June quarter, bringing its total losses from the year-long global credit crisis to 139 billion yen ($1.3 billion) so far.
Mitsubishi UFJ has a market capitalisation of $93.6 billion, making it the seventh-largest company on the FTSE global bank index.
In addition to a sharp downturn in global markets, which has sparked trading losses and curbed customer demand for investment products, Japanese banks have been struggling to make headway in a sluggish domestic economy.
Two of Mitsubishi UFJ's rivals, Mizuho Financial Group and Sumitomo Mitsui Financial Group, last week both reported sharp declines in first-quarter core profitability.
The lacklustre results come amid a stream of economic data pointing to weakness in the world's second-largest economy.
Manufacturing activity has now contracted for a fifth straight month while wage earnings and housing starts have both dropped from a year ago, further evidence that high energy prices and shrinking exports may push Japan into a recession.
Given the bleak outlook, Japanese banks are increasing their push abroad.
Overseas business has become one of the rare bright spots for the truggling industry. Yet analysts say overseas loans are still not very profitable because Japanese banks lose the advantage of low-cost funding when they go abroad.
Mitsubishi UFJ said group net profit totalled 51.2 billion yen ($473.2 million) in the three months to the end of June, down from 151.3 billion yen a year earlier.
The bank kept its forecast for full-year net profit of 640 billion yen, representing almost no growth from the previous year, when profits fell nearly 28 percent.
That compares with an average forecast of 656.2 billion yen in a poll of 12 analysts by Reuters Estimates. Most analysts do not provide quarterly estimates for the bank.
Core operating profit fell by a quarter from the previous year.
Shares of Mitsubishi UFJ rose 9.4 percent in April-June, although they are still down about 14 percent for the year to date to Monday's close. Tokyo's index of bank stocks rose about 13 percent in April-June.
Before the announcement, shares of Mitsubishi UFJ finished up 1.6 percent, while the bank index ended up 1.2 percent.