Japanese bank Mitsubishi UFJ blames one-off factors for drop in first-quarter earnings

A sign for MUFG Bank in Tokyo, Japan on April 3, 2018. REUTERS/Toru Hanai/File Photo

TOKYO, 2 Aug. (Reuters) – Mitsubishi UFJ Financial Group Inc (MUFG) (8306.T)Japan’s largest lender by assets reported a 70.3% drop in first-quarter net income on Tuesday due to a one-time loss related to the sale of MUFG to Union Bank.

Mitsubishi UFJ, which owns 21.5% of Wall Street Morgan Stanley, reported a net profit of 113.7 billion yen ($869.1 million) for the period from April to June against 383.1 billion yen a year earlier.

The drop in earnings reflected a valuation loss of 254 billion yen on bonds and other assets held by MUFG Union Bank, an accounting treatment required before selling its US retail banking division to US Bancorp later this year for $8 billion.

Previously noted losses will be partially offset once the sale is completed, the bank said, and the total impact on full-year net income is expected to be around 200 billion yen.

Mitsubishi UFJ is seeing a surge in overseas lending as the economic recovery fueled by the easing of pandemic restrictions revived commercial activity as well as demand for loans to expand business and investment.

The bank maintained its full-year profit forecast of 1 trillion yen, down 12% from the previous year, when it recorded record profits. Forecast compared to a median forecast of 1.05 trillion yen based on 13 analyst estimates compiled by Refinitiv.

Two other Japanese megabanks, Sumitomo Mitsui Financial Group (8316.T) and Mizuho Financial Group (8411.T), also maintained their full-year profit forecasts when they reported last week. read more

($1 = 130.8300 yen)

Reporting by Makiko Yamazaki; Editing by Kirsten Donovan and Susan Fenton

Our standards: Thomson Reuters Trust Principles.