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Saturday May 17, 2008

Sumitomo Mitsui posts Q4 rebound, forecasts modest growth


TOKYO: Sumitomo Mitsui Financial Group (SMFG) reported a three-fold increase in fourth quarter profit, rebounding from massive losses at its consumer finance unit a year earlier, but forecast weaker-than-expected growth this year.

Sumitomo Mitsui, Japan’s second biggest bank by market value, said investments related to risky subprime investments cost it 93 billion yen (US$889mil) in the year to March, and estimated its exposure had been whittled down to just 5.5 billion yen.

That’s just a sliver of the 645 billion yen that rival Mizuho Financial Group has lost on subprime related investments.

The bank also said it would raise its dividend for the year to March 2009 by 17%, a move that could support its stock, which has lost nearly one-fifth of its value over the past year.

While SMFG has little subprime exposure, it has taken greater hits from its ties to the consumer finance industry, where stricter regulations have dented profits.

Faced with a weak domestic economy, it has seen sluggish lending growth and been forced to raise provisions against bad loans.

SMFG forecast that net profit would rise 4% to 480 billion yen in the year to March 2009, well short of the market consensus of 547.8 billion yen derived from the average estimate of 11 analysts surveyed by Reuters Estimates. – Reuters

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