TOKYO, Feb 15 (AFP): Japan's Mitsubishi UFJ Financial Group, the world's largest bank, said Wednesday it expects an annual net profit of about 10 billion dollars -- almost twice that of its closest domestic rival.
MUFG, which became the world's top financial services group by assets after a merger last October, raised its net profit forecast for the year to March to 1.17 trillion yen (9.95 billion dollars) from 930 billion yen previously.
That would dwarf the profits of Japan's number two bank Mizuho Financial Group, which currently forecasts full-year net profit of 630 billion yen.
The combined operations of merger partners Mitsubishi Tokyo Financial Group and UFJ made a net profit of 1.03 trillion yen in the nine months to December.
That compared with a loss of 101.50 billion a year earlier as UFJ fell deep into the red because of bad loans.
MUFG gave no results for the third quarter alone. In the first six months of the year the two merger partners made a net profit of 711.8 billion yen, the largest of any Japanese company for the period.
Japan's banks are seeing a significant improvement in their fortunes as they finally emerge from a bad debt crisis stretching back over a decade as the world's second-largest economy crawls out of a decade-long slumber.
MUFG also gave nine-month results excluding those of UFJ before the October merger which showed net profit of 615.37 billion, up 116.5 per cent from the profits of Mitsubishi Tokyo Financial Group alone a year earlier.
In the nine months to December, "overseas economies such as the United States and China showed steady signs of economic growth," MUFG said in its earnings release statement.
"Meanwhile, the Japanese economy started off slowly, as exports were sluggish due to the decline of foreign demand, which was caused by an adjustment in inventory mainly in the IT sector.
"However, increases in domestic capital expenditures and the steady rise in private consumption continued during this period, and with the rise in exports in summer, the Japanese economy moved toward recovery and the possible end of deflation," it added.
MUFG is on course to post the second-largest net profit by any Japanese company for the year to March, dwarfed only by Toyota Motor.
In the first nine months of the year it actually beat the world's number two automaker which last week reported a net profit for the period of 968.09 billion yen.
With its merger, MUFG shot past Citigroup of the United States for the rank of the world's biggest banking group in terms of assets which total about 190 trillion yen.
In terms of earnings it is still far behind the Citigroup, however, which last month reported a net profit for the fourth quarter of 6.93 billion dollars.
Japan's government injected nearly 10 trillion yen into 16 major banks from the late 1990s to ease strains on their balance sheets and after several mega-mergers the industry is now in much better shape.