MUFG records 1st net loss in FY 2008, eyes profit in FY 2009

TOKYO, May 19 Kyodo -
Mitsubishi UFJ Financial Group Inc. on Tuesday reported its first red ink since
the group's launch in 2005 amid the turmoil in global financial markets, but
said it is aiming to return to profit by next March.
Japan's largest banking group incurred a group net loss of 256.95 billion yen
for the year that ended March 31, in stark contrast to its year-earlier profit
of 636.62 billion yen, while annual revenue fell 11.2 percent from fiscal 2007
to 5.68 trillion yen.
For the current fiscal year through March 2010, MUFG is expecting a net profit
of 300 billion yen.
With the result, four of Japan's top six banking groups -- MUFG, Mizuho
Financial Group Inc., the second largest, No. 3 lender Sumitomo Mitsui
Financial Group Inc. and Chuo Mitsui Trust Holdings Inc. -- have now reported
falling into the red in fiscal 2008 as bad-loan disposal costs and equity
investment losses surged amid the global financial crisis.
''The biggest incident in the previous fiscal year was definitely the Lehman
shock,'' MUFG President Nobuo Kuroyanagi said at a press conference, referring
to the financial and economic turbulence after the collapse of Lehman Brothers
Holdings Inc. of the United States in September. ''Things have frozen since
then and everything has moved unexpectedly.''
He said the Japanese economy is likely to recover gradually hereafter, which
will help MUFG to return to the black in the current fiscal year. But the
banking group is likely to continue booking a large amount of bad-loan disposal
costs as bankruptcies are likely to remain at a high level.
In fiscal 2008, MUFG saw its bad-loan disposal cost roughly double from a year
earlier to 608.46 billion yen while its losses linked to equity investments
ballooned from 24.87 billion yen the year before to 408.78 billion yen.
To take the blame for the earnings deterioration, MUFG said it will waive
directors' bonuses for fiscal 2008 and cut their salaries and employees'
bonuses for fiscal 2009.
MUFG was created through the integration of Mitsubishi Tokyo Financial Group
Inc. and UFJ Holdings Inc. on Oct. 1, 2005.
Last October, the nation's banking industry leader made a $9 billion investment
in Morgan Stanley in the wake of the collapse of Lehman Brothers. After
examining ways to boost synergies, MUFG and Morgan Stanley agreed in March on a
plan to merge their Japanese brokerage units into a new securities company.
Kuroyanagi said MUFG's strategy for brokerage business is based on the alliance
with Morgan Stanley. ''It has been a big challenge for us to level up our weak
orthodox investment banking businesses overseas, and we intend to focus on this
matter,'' he said.
==Kyodo