Japan's SMFG net profit drops 60% due to credit costs

Sumitomo Mitsui Financial Group Inc (SMFG) reported on Wednesday a 60% fall in first-quarter net profit due to a jump in credit-related costs during the coronavirus pandemic.

First quarter net profit at 86 bln yen

Credit costs triple to 114.8 bln yen

Keeps full-year net profit forecast at 400 bln yen

Adds details

TOKYO, July 29 (Reuters) - Sumitomo Mitsui Financial Group Inc (SMFG) 8316.T reported on Wednesday a 60% fall in first-quarter net profit due to a jump in credit-related costs during the coronavirus pandemic.

Profit reached 86 billion yen ($819 million) for the three months to the end of June, compared with 215.7 billion yen in the same period a year earlier, Japan's second-largest lender by assets said in a filing to the stock exchange.

For the full year to the end of March, SMFG reiterated its forecast for profit of 400 billion yen. That compared with the 498.1 billion yen average of 12 analyst estimates compiled by Refinitiv.

Japanese banks have been struggling with ultra-low interest rates for years and had said credit-related costs this year would reach levels not seen since the global financial crisis.

SMFG's credit-related costs in the first quarter tripled to 114.8 billion yen from a year earlier amid a surge in financial needs among Japanese companies due to the fallout from COVID-19.

The lender has estimated these cost will reach 450 billion yen in the current financial year which runs to March.

SMFG's net interest income at the banking arm was 209.7 billion yen for the first quarter, a 3.7% rise year on year.

Peers Mizuho Financial Group Inc 8411.T and Mitsubishi UFJ Financial Group Inc 8306.T are scheduled to announce first-quarter earnings on Friday and Tuesday, respectively.

($1 = 104.9700 yen)

(Reporting by Junko Fujita; Editing by Louise Heavens and Edmund Blair)

((Junko.Fujita@thomsonreuters.com;))

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