A combined net profit of five major Japanese banking groups is estimated to fall 23.3 percent in fiscal 2020 from a year earlier to 1.53 trillion yen ($14.3 billion) as a deterioration in borrowers' businesses due to the spread of the new coronavirus will drive up credit costs, according to their earnings forecasts released by Friday.

Excluding Mitsubishi UFJ Financial Group Inc., four of the five groups said their profit will decrease in the business year through March 2021, partly because they have to book larger-than-expected loan-loss reserves in anticipation of possible bankruptcies of borrowers.

Sumitomo Mitsui Financial Group Inc. said its net profit is expected to sink 43.2 percent to 400 billion yen, while Mizuho Financial Group Inc. forecasts a fall in net profit of 28.6 percent to 320 billion yen.

Resona Holdings Inc. said it expects to post a net profit of 120 billion yen, down 21.3 percent.

"The severe situation is likely to continue for about two years, given a decline in domestic demand and deterioration in the job market," Resona President Masahiro Minami told journalists Tuesday.

Sumitomo Mitsui Trust Holdings Inc. sees its fiscal 2020 net profit shrinking 14.1 percent to 140 billion yen.

Meanwhile, Mitsubishi said its net profit is likely to rise 4.1 percent to 550 billion yen despite logging a sizable loss related to an overseas subsidiary in fiscal 2019.

However, the lender said the outlook "could change significantly," depending on how well the pneumonia-causing virus can be contained.

Still, earnings by the five banking groups could deteriorate further as Japanese companies are unlikely to borrow actively and launch new investments if the global coronavirus pandemic persists.

==Kyodo

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