MUFG Profit at Decade Low on $937 Million Virus-Linked Costs

(Bloomberg) -- Mitsubishi UFJ Financial Group Inc.’s profit slid to the lowest in a decade after Japan’s biggest bank added 100 billion yen ($937 million) in coronavirus-related charges for expected loan losses and on stock holdings hurt by volatile markets.

Net income fell about 40% to 520 billion yen in the year ended March 31, a preliminary earnings statement showed Thursday. The virus-related charges come on top of 360 billion yen in already reported writedowns related to the lender’s holdings in three Southeast Asian banks.

Read more on MUFG’s writedowns on Asian units

Banks around the world are booking hefty provisions in anticipation of a wave of bad loans as the coronavirus cripples the global economy. S&P Global Ratings downgraded the outlook for Japan’s major banks including MUFG last week, saying the economic strain stemming from the pandemic will put prolonged pressure on their asset quality and revenue.

“Creditworthiness of the three banking groups has come under pressure as credit costs rise, unrealized gains on marketable securities fluctuate, and impairment risk grows,” S&P analysts wrote.

MUFG had previously forecast annual profit of 750 billion yen. The latest statement includes a 65 billion yen impairment on other stock holdings and about 35 billion yen in provisions for credit to customers hit by the pandemic.

Tokyo-based MUFG maintained its dividend forecast of 12.5 yen a share.

The statement was released after the close of stock trading in Tokyo. MUFG climbed 2.2%, paring this year’s decline to 27%.

The bank is scheduled to announce its full results on May 15. Its biggest local rivals -- Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. -- are due to report on the same date.

©2020 Bloomberg L.P.

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