Japan's Sumitomo Mitsui Financial Group has seen its profits surge in the six months to September as the bank enjoyed a marked decline in bad debt costs.
Sumitomo said that H1 profit grew by an impressive 635% to JPY392 billion, up from JPY53.4 billion a year before. This prompted the bank to forecast an uprated full-year net earnings result of some JPY550 billion for the fiscal term ending March 31, 2006.
The vast rise in pre-tax profit was largely the result of reduced costs in clearing bad debts this year. Bad loans stood at 2.5% of total lending at the end of H1, down from 3.2% at the end of March 2005.
Sumitomo’s strong performance follows similarly encouraging numbers from rival Mizuho and provides further evidence of the recovery in the Japanese banking industry. Japan is enjoying something of an economic resurgence, fuelled by a rebound in stock market performance.
Japan has spent billions of yen bailing out banks in financial strife since the late 1990s after land pledged to them as loan collateral collapsed in value by up to 80% in the country’s slump.