UPDATE 1-Japan's MUFG Q3 profit doubles on stock rally, bond gains

Fri Feb 1, 2013 3:04am EST

* Q3 net profit at Y242 bln vs Y119.7 bln a year earlier

* Overseas loans grow sharply, domestic lending remains tepid

* Keeps full-year forecast below market estimates

By Taiga Uranaka

TOKYO, Feb 1 (Reuters) - Mitsubishi UFJ Financial Group's third-quarter net profit doubled, driven by a year-end rally in Japanese stocks that boosted the value of its massive equity portfolio.

A cheaper yen also pushed up yen-denominated earnings of Japan's largest lender by assets as the share of its overseas business has grown rapidly as the result of the effort to make up for weak lending at home.

MUFG posted a net profit of 242 billion yen ($2.7 billion) for the October-December period, up from 119.7 billion yen a year earlier. The bank provide nine-month results and quarterly figures were calculated by Thomson Reuters.

Japanese commercial banks, which hold massive equity portfolios, saw their returns rise in the final months of last year when the stock market surged on investor expectations for an aggressive economic policy by Prime Minister Shinzo Abe. The benchmark Nikkei average gained nearly 20 percent in the final three months of 2012.

MUFG, Japan's largest bank by assets, holds a 22 percent stake in Morgan Stanley.

MUFG expanded overseas loans during the quarter, leveraging its ample cash holdings as European rivals retreated in the wake of that region's debt crisis. The bank's profits were also boosted by gains from Japanese government bond trading amid the country's ultra-low interest rates.

MUFG kept its full-year net profit forecast at 670 billion yen, below an average estimate of 685.6 billion yen in a poll of 17 analysts by Thomson Reuters.

Shares of MUFG rose 26 percent in the final three months of 2012, outperforming a 17 percent gain in the benchmark Nikkei average. Prior to the earnings announcement on Friday, the bank's shares closed down 1.15 percent compared to a 0.5 percent gain in the Nikkei.

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