Japanese bank declares profits drop

1 August 2008

Sumitomo Mitsui has declared reduced profits for the second quarter.

Stocks in the bank dropped in Tokyo after it said that net income fell to $539 million - a 51 per cent drop.

A rise in bad loans due to the general economic malaise currently being experienced in Japan has been blamed for the latest profits declaration.

Drops in financial stocks across the world are also thought to have caused the decline.

However, UBS analyst Nana Otsuki believes that Japanese banks are still well-positioned to weather the ongoing credit crisis, as they re-shape their businesses due to the crunch conditions.

"Disposal of high risk overseas assets is progressing [at the banks] and losses are likely to be limited," she told Bloomberg.

Elsewhere in the profits declaration, Sumitomo Mitsui said that revenue had declined by 7.2 per cent over the quarter - and that big losses had been generated by its main banking unit.

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