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Last Updated: Wednesday, 19 May, 2004, 07:37 GMT 08:37 UK
Bad debts 'damage Japanese bank'
UFJ logo
The economic turnaround under way in Japan is leaving one of its biggest banks behind, reports say.

UFJ, the smallest of the so-called "megabanks", is due to report results for 2003 in a week's time, as economic growth soars and bankruptcies shrink.

Japanese media and news agencies say the bank may announce a 300bn yen ($2.7bn; 1.5bn) net loss, as the cost of cleaning up bad debts mounts.

The bank said it had yet to finalise its figures, and refused to comment.

Back to boom

In late April, UFJ said it was raising its estimate of its spending on dealing with massive problem loans for the year to March 2004 by 63% to 813bn yen.

At the time, it said consolidated group profits would still reach 78bn yen.

Like its peers, the bank has been saddled with massive debts built up during the 1980s boom and secured against property and shares which have since plunged in value.

The aftermath has been one factor in Japan's long stagnation.

Now, though, the wider economic picture seems to be improving.

The economy grew at an annual rate of 5.6% in the first three months of 2004, comfortably ahead of expectations, according to figures released on Tuesday.

And corporate failures marked a 16th straight month of decline, down 21.5% year on year as conditions improved for firms both large and small.

The improvement has triggered a rally on Tokyo's stock market, making up some ground after last week's heavy falls, with banking stocks including UFJ - up 7.5% - leading the way.


SEE ALSO:
Japan's growth beats estimates
18 May 04  |  Business
Nikkei hit by global growth fears
10 May 04  |  Business
Japan's import spurt backs growth
21 Apr 04  |  Business
Optimism at 7-year high in Japan
01 Apr 04  |  Business


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