Bailout of Sharp seen paring profits at Mizuho, Mitsubishi UFJ

Singapore

A BAILOUT of Sharp Corp threatens to dent profits of Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc that are the highest in almost a decade.

A conversion of loans into equity will translate into a write-off for the biggest lenders that could reduce the full-year recurring income of Mizuho by 17 per cent and of Mitsubishi UFJ by 5 per cent, according to Takashi Miura, a senior bank analyst for Credit Suisse Group AG. Shinichiro Nakamura, a senior bank analyst at SMBC Nikko Securities Inc, expects the hit to be 4.8 per cent and 3 per cent respectively. Default risk on Sharp, a supplier of displays to Apple Inc, jumped to a 22-month high in March, according to CMA prices.