Mitsubishi UFJ Financial Group reported a 70% drop in first-quarter net profit, attributing the drop to one-off losses related to the sale of MUFG Union Bank and the decline in the value of its stake in Grab Holdings.
The bank, Japan’s largest by assets, wrote down 254 billion yen ($1.9 billion) on bonds and other assets held by MUFG Union Bank, in an accounting action required ahead of the sale of the U.S. of the unit to US Bancorp for $8 billion later this year.
The losses will be partially offset when the sale is completed, and the total impact on net profit for the year is expected to be 200 billion yen, the bank said.
Mitsubishi UFJ, which controls 21.5 percent of Morgan Stanley, also took a 43.2 billion yen writedown on the value of its stake in Grab to reflect the drop in its share price.
The Japanese bank invested $706 million in Grab in 2020 as it sought growth amid a prolonged low interest rate environment and shrinking domestic inflation.
Net profit was 113.7 billion yen ($869.1 million) in the April-June quarter, up from 383.1 billion yen a year ago.
However, it showed strong growth in net interest income. Demand for loans increased especially abroad as higher interest rates raised the cost of financing through bond markets, making loans more attractive.
The company maintained its full-year profit estimates at 1 trillion. yen, marking a 12% drop from a year ago, when it reported record profits.
Analysts are talking about 1.05 trillion. yen.
Source: Capital
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