Japan's Resona Holdings Inc said on Tuesday it would likely beat its first-half profit forecast by 20 percent, helped by strong commissions and lower credit costs, and said it had no direct exposure to the troubled U.S. subprime mortgage market.
The forecast upgrade from Resona, Japan's fourth-largest bank, becomes after several other large Tokyo financial financial firms announced greater-than-expected damage from subprime investments.
Mitsubishi UFJ Financial Group Inc, Japan's largest bank, said on Monday its would write down the value of its subprime-related investments by as much as 30 billion yen ($262 million), six times more than previously announced.
Nomura Holdings Inc, Tokyo's flagship brokerage, posted its first quarterly net loss in more than four years last week, due to losses on mortgage-backed securities.
Resona, said in a statement it had no direct investment in products related to the U.S. subprime mortgage market.
However, it said it has about 500 million yen ($4.4 million) invested in funds of funds, some which are exposed to subprime products. The bank made a similar disclosure about its subprime investments in August.
Resona, which is nearly half owned by the Japanese government after a bailout, said it now expected a group net profit of 120 billion yen ($1.05 billion) for the six months to Sept. 30, compared with its previous forecast of 100 billion.
Commissions were helped by sales of investment trusts, a spokesman said. Credit costs decreased as the financial health of some lenders improved, the bank said in a statement.
On a recurring basis, the bank slightly lowered its first-half forecast, to 135 billion yen from its previous estimate of 140 billion.
Shares in Resona rose 2.6 percent to 197,000 yen before the announcement, compared to a 1.1 percent advance in Tokyo's index of bank stocks.
So far this year, shares of the lender have fallen nearly 40 percent, underperforming the bank stock index's 22 percent drop. ($1=114.49 Yen)