Mitsubishi UFJ suffers quarterly loss but predicts rapid return to profit

JAPAN&rsquo;S largest bank, Mitsubishi UFJ, (MUFG) reported a $2.2bn (&pound;1.4bn) quarterly loss yesterday, hit by the recession and hefty losses on its stockholdings, but forecast a return to profit.<br /><br />MUFG and its rivals have lost billions of dollars from rising bad loans and a slide in the value of their massive stock portfolios. Japanese banks traditionally buy stakes in their clients to seal business ties, making them sensitive to equity prices.<br /><br />Credit costs, including provisions to cover bad loans, have increased sharply as the world&rsquo;s second-largest economy is battered by its worst recession since World War Two. But MUFG is expecting a recovery this year, helped by a recent upswing in the stock market.<br /><br />&ldquo;It&rsquo;s a given that they will be in the black,&rdquo; said Ismael Pili, an analyst at Macquarie Capital Securities in Tokyo.<br /><br />&ldquo;If last year was all about higher equity losses, this year will be about higher provisions but the provisions will not be sufficiently high enough to push them into the red.&rdquo;<br /><br />MUFG, which last year paid $9bn for a 21 per cent stake in US investment bank Morgan Stanley, reported a January to March group net loss of 214.9bn yen ($1.4bn). The bank made 322bn yen a year earlier. For the full year, MUFG lost a total of 256.95bn yen, its first annual loss since the group was formed in 2005.