Saturday, May 17, 2008

Sumitomo Mitsui Financial Group, Inc. posts 4.6% increase in net profit

Yesterday, Japan’s third largest banking group Sumitomo Mitsui Financial Group, Inc. (SMFG) (TYO: 8316) posted a rise of 4.6% in its net profit in the previous fiscal year. The company was able to make up for its losses caused by sub-prime loan exposure and write-downs taken for non-financial institutions with its one-off gains from recent leasing unit consolidation.

SMFG posted a net profit of 461.54 billion yen which was 441.3 billion in the previous fiscal year. Pretax profit grew by 4.1 % and revenue 18.5% to 4.62 trillion. In January, SMFG forecasted that it would lose 99 billion yen but the real loss was below expectation. The group lost 30 billion from U.S. bond insurers. Despite all these the group posted a higher profit. Forbes reports:

Sumitomo Mitsui Financial also highlighted improved business profit from its core banking operations.

Business profit from banking operations -- or profit derived from ordinary banking operations including deposits, loans and foreign exchange as well as securities operations, excluding one-off factors -- is most commonly used as a profit indicator in the Japaneses banking industry where other industries employ operating income.

Business profit from banking operations at Sumitomo Mitsui Banking Corp, the core unit of the group, reached 819.7 billion yen in the year to March 2008, up from 740.6 billion yen a year earlier, mostly on robust gains from trading activity and its lending business.

The group made a trading loss of 10 billion yen in last fiscal year which is much smaller than 74.7 billion in the previous year. Despite the group’s strong effort to clean its balance sheet, it has 803.9 billion non-performing loans which makes up 1.24% of its outstanding advances.

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