Japan's biggest bank Mitsubishi UFJ Financial Group Inc. posted a jump in quarterly profit, driven by a stock market rally, while its rival Mizuho stayed in the red on mounting derivative losses and bad loans.
Mitsubishi UFJ said Friday its net profit for April-June shot up 48.3 percent from a year earlier to 75.9 billion yen ($798 million), tracking a rally off financial crisis lows in the Tokyo stock market. Revenue slipped 7.1 percent to 1.3 trillion yen.
"Our securities businesses were brisk during the quarter. A recovery in the stock market also helped us lift profit," said Mitsubishi UFJ spokesman Yuichiro Moto. Cost cuts also helped, he said.
The bank's bad loans during the quarter rose to 189.8 billion yen from 141.7 billion yen the same period last year.
"The level of Mitsubishi UFJ's bad loans remains very high, which simply reflects a slumping economy," said Tatsuo Majima, a banking analyst at Tokai Tokyo Securities Co. Ltd.
Majima said Mitsubishi UFJ increased its profit thanks to gains in stock sales.
In a sharp contrast to Mitsubishi UFJ, its rival Mizuho Financial Group stayed in the red last quarter, posting a 4.49 billion yen ($47.3 million) loss as derivatives trading soured and bad loans surged.
Tokyo-based Mizuho said Friday it was on track to return to profit this fiscal year after booking its first annual loss in four years the previous fiscal year. It posted a 133.0 billion yen profit in the April-June first fiscal quarter of last year.
Japanese banks have weathered the U.S. mortgage crisis with smaller losses then their Western counterparts, but they have been hurt by the fallout from the global slowdown.
The bank's bad loans stood at 76 billion yen during the April-June quarter, up from 4.7 billion yen a year earlier. Losses on derivatives trading totaled over 87 billion yen in the quarter.
Mizuho's April-June revenue sank 26.5 percent to 703.47 billion yen ($7.4 billion) but it noted signs the downturn may be slowing and stock prices are recovering.
All of Japan's "Big Three" banking groups, which include Mizuho, sank into losses for the fiscal year ended March 31, battered by a stock market plunge.
Ailing stock markets were devastating for Japanese banks because they own stakes in a network of companies to strengthen business ties. Japanese shares plunged last year after the financial crisis but have been recovering in recent months.
Mizuho said it will be in the black for the full fiscal year through March 2010, forecasting a 200 billion yen ($2.1 billion) profit.
On Thursday, Sumitomo Mitsui Financial Group reported a 25 percent jump in quarterly profit at 58.1 billion yen ($611.6 million) on climbing stock prices and a slowly improving economy.
Shares of Mitsubishi UFJ rose 4.4 percent to 566 yen Friday. The bank released its earnings after the market's close. Mizuho added 1.4 percent to 215 yen with Sumitomo Mitsui up 0.5 percent at 4,050 yen.
