UPDATE 1-MUFG's 9-mth profit halved, subprime losses grow

TOKYO, Jan 31 (Reuters) - Mitsubishi UFJ Financial Group (8306.T), Japan's largest bank, said its profit for the nine months to December had halved, hit by $517 million in losses on subprime investments and problems at its credit card unit.

Japanese banks such as MUFG have avoided the worst of the subprime damage that hit Merrill Lynch MER.N and other overseas rivals, but their losses are steadily widening.

Soured bets on subprime products cost the bank 55 billion yen ($517 million) as of the end of December, more than ten times the 4 billion yen in losses it had owned up to just three months earlier.

MUFG stuck to its already lowered forecast for a 600 billion yen net profit for the year to March, having already cut its outlook by 25 percent in October.

That compares to a market consensus of 605.4 billion yen in a poll of 13 analysts by Reuters Estimates.

Group net profit for the first nine months of the business year fell to 314.7 billion yen ($3 billion) from 690.6 billion yen a year earlier.

On top of the subprime pain, MUFG has also been hurt by losses at its credit card affiliate, Mitsubishi UFJ Nicos 8583.T, as tighter government regulation has hit industry profits.

Mitsubishi UFJ Nicos on Wednesday booked a loss of 114.8 billion yen for the nine months to December.

MUFG's shares lost 28 percent last year, in line with Tokyo's index of bank stocks .IBNKS.T, which also fell 28 percent.

Shares of MUFG closed up 0.4 percent on Thursday, before the announcement, while the Tokyo banking index gained 1.1 percent.

Also reporting on Thursday was Mizuho Financial Group (8411.T), Japan's second-largest bank. [ID:nnT279837] ($1=106.36 Yen) (Reporting by David Dolan; Editing by Lincoln Feast)