Japanese banks’ painstaking efforts
to rebuild their battered balance sheets after the country’s
so-called ‘lost decade’ have been heavily impeded by the tumultuous
economic events of 2008, full-year figures confirm.

The country’s three megabanks – Mitsubishi UFJ
Financial (MUFG), Mizuho and Sumitomo Mitsui – posted a collective
full-year loss of $12.6 billion (in dollar terms). According to
filings, Mizuho and Sumitomo Mitsui reported losses of $6.1 billion
and $3.9 billion respectively, while a preliminary MUFG statement
forecast a $2.6 billion loss.

MUFG said it is to cancel its $262 million
purchase of Citigroup’s Japanese unit Nikko-
Citi Trust and Banking, while Mizuho is now expected to raise up to
$8 billion in additional capital.

Half of Mizuho’s losses came from its retail
division, Mizuho Bank, which swung to a full-year loss of $3.1
billion versus a profit of $2.1 billion a year earlier, albeit
largely on losses relating to the unit’s securities portfolio.

Others fared better: Resona, the country’s
fourth-largest bank, posted a 59 percent fall in net income but
still produced a profit of $1.25 billion.

The proportion of risk-managed loans at
Resona’s three subsidiary banks rose fractionally year-on-year from
2.26 percent to 2.46 percent, but total loan loss reserves fell
from $4.1 billion to $3.7 billion.

Promise, the country’s second-largest consumer
finance lender, reported a net loss of $1.3 billion and announced
it is to reduce its 306 staffed branches for unsecured loans to
148, converting 134 into unstaffed branches and closing the other
24.

The firm, which saw loan losses rise by 12.7
percent to $2.1 billion, had 1,606 staffed and unstaffed branches
at 31 March, down from 2,124 a year previous. Fellow consumer
credit firm Acom, three quarters owned by MUFG, reported a
full-year figure of $139 million, 62 percent less than its 2007
profit.

Aozora and Shinsei, two banks both controlled
by US private equity firms, announced full-year losses of $2.5
billion and $1.49 billion, respectively, amid continued speculation
that the two institutions are in merger talks to form the country’s
sixth-largest retail bank.

A comprehensive analysis of Japanese
full-year results can be found in
RBI 613.