Mitsubishi UFJ's Quarterly Net Profit Falls on Higher Credit Costs — Update

By Kosaku Narioka

Mitsubishi UFJ Financial Group reported a decline in its first-quarter net profit, partly due to higher credit costs despite greater earnings from lending and higher fees.

The Japanese financial company said Thursday that net profit declined 0.4% from a year earlier to 555.89 billion yen, equivalent to $3.71 billion, for the three months ended June. That beat the estimate of Y429.38 billion in a poll of analysts by data provider Quick.

Mitsubishi UFJ booked total credit costs of Y166.76 billion in its first quarter, higher than Y41.64 billion a year earlier, as it provided for potential loan losses, primarily for individual cases abroad.

Net interest income--the difference between interest earned on loans and that paid on deposits--climbed 41% from a year earlier to Y823.13 billion, as lending spreads widened at home and abroad.

Japanese government bond yields, which serve as a reference for lending rates, have been trending higher in recent months as the Bank of Japan unwound its unorthodox monetary-easing measures. On Wednesday, the BOJ raised its policy rate to 0.25% and said it will roughly halve the amount of its monthly government bond purchases by early 2026.

The financial company booked net losses on debt securities of Y12.68 billion in its first quarter, compared with gains of Y49.80 billion a year earlier. First-quarter net fees and commissions rose 22% to Y447.94 billion.

Mitsubishi UFJ said it continues to target net profit of Y1.500 trillion for the fiscal year ending March 2025.

In June, Japan's Financial Services Agency ordered Mitsubishi UFJ's banking unit and its two securities joint ventures with Morgan Stanley to improve operations after the country's securities watchdog found that the entities shared clients' nonpublic information against their will.

Mitsubishi UFJ in July said it would cut executives' pay, taking responsibility for its units' actions.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

August 01, 2024 05:02 ET (09:02 GMT)

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