Japan's third-largest bank said today that it expects to post subprime-related valuation losses of about 87 billion yen ($786 million).
Sumitomo Mitsui Financial Group Inc today posted a 59 percent decline in second-quarter profit after a loss on U.S. mortgage investments and a writedown on its stake in a credit card firm. The company is set to keep its full year forecast unchanged.
SMFG also saw net income fall to 50.9 billion yen ($460 million) in the three months ending September 30, from 124 billion yen a year earlier.
Turmoil
Last week, rival firm Mizuho Financial Group Inc reported a loss of 70 billion yen as the turbulence in the credit market caused by the subprime fiasco made itself known in Japan.
Sumitomo Mitsui also wrote down a stake in OMC Card Inc. after it lost almost half its market value in the two months after the acquisition.
"Japanese banks have kept saying their exposure to subprime loans is limited, but rating agencies are now moving to downgrade Alt-A products, so uncertainties remain," commented Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management.
Market leader Mitsubishi UFJ Financial Group Inc is due to announce its results on Wednesday, which analysts expect will reveal the extent of the subprime impact in greater detail.
November 19, 2007