Yo_ BOT-M'bishi Sees Y150bn Net Loss On Bad-Loan Disposals
Tuesday, April 3, 2001
TOKYO (Nikkei)--Bank of Tokyo-Mitsubishi, a unit of Mitsubishi Tokyo Financial Group Inc. (8306), is poised to issue downward revisions to its fiscal 2000 earnings projections in order to reflect larger-than-expected disposals of bad loans, The Nihon Keizai Shimbun learned Monday.
BOT-Mitsubishi now expects to report a net loss of about 150 billion yen for the fiscal year ended Saturday, down from the 60 billion yen net profit forecast last autumn. It becomes the sixth major bank to signal that it will book a net loss in fiscal 2000, after Daiwa Bank (8319), Asahi Bank (8322) and the three banks of the UFJ Group. The net loss will be the city bank's first since fiscal 1997.
BOT-Mitsubishi will beef up its disposal of nonperforming loans to 550 billion yen, nearly double the 280 billion yen figure projected in the fall.
Meanwhile, Mitsubishi Trust & Banking Corp., another Mitsubishi Tokyo Financial Group unit, expects to report a net profit of about 20 billion yen, less than half its initial projection. Its disposal of bad loans will swell by 50% to 170 billion yen. The earnings downgrades are expected to be announced this week.
Both BOT-Mitsubishi and Mitsubishi Trust are seeing new nonperforming loans emerge as the earnings performance of their corporate borrowers deteriorates. The two banks are also tightening their loan assessment standards and adding to set-asides against potential loan losses in order to lay the groundwork for a final cleanup of nonperforming loans in fiscal 2001 and beyond.
The banks have already introduced fair value accounting standards for their portfolios of cross-shareholdings in fiscal 2000, one year before they are actually required to do so. As a result, they are holding off on selling shares in order to lock in gains that would offset losses from bad-loan disposals.
Despite the major earnings downgrades, the banks will not trim their planned dividend payouts of 8.5 yen for BOT-Mitsubishi and 7 yen for Mitsubishi Trust. BOT-Mitsubishi has retained earnings of roughly 1 trillion yen, while Mitsubishi Trust holds retained earnings of around 200 billion yen -- enough of a cushion to keep payouts unchanged, the banks believe.
The two banks have already returned all the public funds received under the government's recapitalization program, which means that they are no longer bound to earnings targets filed to apply for the program.
(The Nihon Keizai Shimbun Tuesday morning edition) |
