Sumitomo Loan Worries

10 years ago

Sumitomo Trust & Banking Corporation (STBC)announced on Thursday that it forecasts a net loss of $317m in the year to March, although analysts fear that further bad debt provisions could ultimately push the loss to five times that amount.

The bank is estimating bad debts for the year to come in at between $608m and $836m , but analysts at Goldman Sachs suggest that these figures are unrealistic. According to the Financial Times, the US bank believes that STBC's loan exposure is currently over five times greater than its current reported figure. If true, Sumitomo's bad debt provisions for the year could be significantly higher, increasing the group loss considerably.

It is believed that Japan's top four banking groups will write off more than $85bn in bad loans in the fiscal year just ended. The write-offs will rise as the government's financial watchdog continues to urge more efficient loan reporting and provisioning. Deflation in the Japanese economy has also increased the number of bad debts.

LEAD BUSINESS STORY: Get Involved As A Writer With Here Is The City Sport

Spotlight on....