SMFG posts big rebound, forecasts modest growth

TOKYO (Reuters) - Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) reported a threefold increase in fourth-quarter profit, rebounding from massive losses at its consumer finance unit a year earlier, and it forecast modest growth ahead.

Sumitomo Mitsui said investments related to risky subprime investments cost it 93 billion yen ($889 million) in the year to March, and estimated its subprime exposure had been whittled down to just 5.5 billion yen.

That's only a sliver of the 645 billion yen that rival Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) lost on subprime-related investments.

But 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. The market downturn has also sparked losses on its stock holdings.

January-March group net profit was 142.05 billion yen, according to Reuters calculations, versus 45.3 billion yen a year earlier.

Rather than strong growth, the results represent a rebound from the previous year, when earnings were sliced by massive losses at money lending affiliate Promise Co (8574.T: Quote, Profile, Research, Stock Buzz).

Reuters calculated the quarterly figures from SMFG's full-year and nine-month earnings statements filed with the Tokyo Stock Exchange.

A poll of seven analysts by Reuters Estimates had implied an average estimate for a 137 billion yen net profit for the January-March fiscal fourth quarter.