MUFG posts 59% Q2 rise; to raise $11 bn

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Mitsubishi UFJ Financial Group posted a 59% rise in quarterly profit helped by stronger lending and said it will raise up to USD 11.2 billion by issuing new shares, as Japan's biggest bank aims to meet tougher global capital requirements.

The 1 trillion yen share issue is a record for a Japanese financial firm and is Japan's biggest fundraising in at least nine years.

Mitsubishi UFJ, which owns one-fifth of US investment bank Morgan Stanley, will become one of scores of Japanese firms to tap a modest rebound in share prices for much-needed cash. Sources told Reuters on Saturday the bank was aiming to raise up to USD 11 billion through new shares.

Japanese companies have so far raised about USD 40 billion this year by issuing common stock and convertible bonds to shore up balance sheets depleted by the economic downturn.

Almost three-quarters of the fundraising has been by financial firms, and analysts say that Mizuho Financial Group and Sumitomo Mitsui Financial Group, Japan's other big banks, will also need to raise more funds.

Japan's big banks suffered smaller credit losses than their Western rivals, but have also taken longer to rebound, hampered by a heavy dependence on domestic lending, where margins remain razor-thin.

One bright spot has been a decline in bad loans, which spiked last year following the collapse of U.S. investment bank Lehman Brothers. Mitsubishi UFJ said group net profit for the July-September quarter was 65.0 billion yen (USD 728 million) against 40.8 billion yen a year earlier. The results beat the average forecast of 34.7 billion yen in a survey of three analysts by Reuters.

Mitsubishi UFJ stuck to its forecast for a full-year profit of 300 billion yen.

That compares with an average estimate for a net profit of 280.6 billion yen in a poll of 11 analysts by Thomson Reuters I/B/E/S.

Mizuho and Sumitomo Mitsui, Tokyo's other two "megabanks", both posted consensus-beating results last week, with Mizuho returning to profit for the first time in five quarters and Sumitomo Mitsui doubling its quarterly profit.

Mitsubishi UFJ's shares finished down 0.6% ahead of the results on Wednesday. The shares have fallen 11% so far this year, outperforming a 17% slide in Tokyo's index of bank stocks.