Mitsubishi UFJ Financial Group Inc, Japan’s largest lender by assets, on Monday reported a 70.5% slide in second-quarter net profit because of another one-off loss related to the sale of U.S. unit MUFG Union Bank.

Mitsubishi UFJ, which owns about 22% of Morgan Stanley, posted a net profit of 117.41 billion yen ($841.83 million) for the July-September period, against 398.4 billion yen a year earlier, according to Reuters’ calculations based on six-month cumulative figures disclosed in a filing.

The Japanese bank maintained its full-year profit forecast of 1 trillion yen, a 12% drop from the previous year when it posted a record profit. The outlook compared with an average forecast of 1.04 trillion yen from 12 analyst estimates compiled by Refinitiv.

On the other hand, the second-largest lender in Japan by assets, Mizuho Financial Group, announced a 29.3% increase in second-quarter net profit on Monday.

According to calculations by Reuters based on six-month cumulative figures disclosed in a stock exchange filing, Mizuho reported a profit of 174.67 billion yen ($1.25 billion) from July through September, up from 135.1 billion yen a year earlier.

Mizuho maintained its profit forecast for the entire year through March at 540 billion yen, versus the average estimate of 13 analysts compiled by Refinitiv of 561.31 billion yen.

Meanwhile, the second-largest bank in Japan, Sumitomo Mitsui Financial Group Inc, reported an 8% increase in second-quarter net profit on Monday and increased its profit outlook due to increased lending as a result of better economic conditions.

According to calculations by Reuters based on six-month cumulative figures disclosed in a stock exchange filing, Sumitomo Mitsui reported a profit of 272.99 billion yen ($1.96 billion) between July and September compared to 252.8 billion yen a year earlier.

Sumitomo Mitsui increased its profit forecast for the entire year through March from 730 billion to 770 billion yen, which is higher than the 753 billion yen average estimate of 13 analysts compiled by Refinitiv.

Mizuho, a smaller competitor, on the other hand, reported a 29% increase in quarterly net profit.

According to Sumitomo Mitsui, both in Japan and the US, there is still a strong demand for loans. The bank’s credit card and consumer finance business units benefitted from a recovery in consumer spending as well.

However, Sumitomo Mitsui Chief Executive Jun Ohta adopted a cautious approach, noting that worries about the outlook were growing during a briefing.

“A recession in the United States and Europe would potentially spread to Asia. The state of the markets, and the outlook will become more difficult to read. We need to be even more prudent,” he said.

At the end of September, a valuation loss on holdings of foreign bonds totaled 1.05 trillion yen, up from 729.6 billion yen at the end of June.

The lender also announced that up to 4.4% of its own shares, worth up to 200 billion yen, would be purchased back.

Sumitomo Mitsui and other significant Japanese banks have made significant investments in foreign bonds, primarily U.S. Treasuries, in an effort to increase returns in the face of extremely low domestic interest rates.

Despite the fact that they have reduced their exposures since last year, their Treasury holdings have experienced unrealized losses as a result of the U.S. Federal Reserve’s faster-than-expected monetary tightening.

(Adapted from Reuters.com)

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