Mitsubishi UFJ Financial Group Inc. decreased the outlook for its group net profit 25 percent for current fiscal year because of subprime-related losses and sluggish domestic lending business.
Mitsubishi UFJ, Japan's biggest banking group by market capitalization, said it forecasts group net profit at 600 billion yen (US$5.22 billion; EUR3.62 billion) in the full year ending March 31, 2008, down from an initial estimate of 800 billion yen in profit.
Tokyo-based Mitsubishi UFJ also reduced its estimate for group net profit in the six months through September to 245 billion yen (US$2.13 billion; EUR1.48 billion) from 350 billion yen.
The banking group said appraisal losses on investments, including some subprime loan related financial products, stood around 20 billion yen (US$173.91 million; EUR120.71 million) at the end of last month.
Its write-down of subprime loan related investments for the fiscal first half will be about 5.0 billion yen (US$43.48 million), it said.
Mitsubishi UFJ also said it will buy back up to 150 million, or 1.43 percent, of its own shares through the market for as much as 150 billion yen (US$1.30 billion; EUR0.9 billion) between Dec. 3 and March 24.
Some other Japanese banks and securities firms have suffered losses due to exposure to mortgage-backed and asset-backed securities during the global credit turmoil sparked by defaults on U.S. subprime mortgages. So-called subprime loans are made to people with poor credit histories.
Last week, Sumitomo Mitsui Financial Group Inc., one of Japan's biggest financial companies, cut its first-half profit outlook by 23 percent due to a write-down resulting from losses in subprime mortgage-backed securities.