FINANCIAL UNITS LIMIT SLIDE IN JAPAN POST'S INTERIM NET PROFIT TO 9.7%

Japan Post Holdings Co.'s consolidated net profit fell 9. 7 per cent on the year to 200.9 billion yen (US$2.3 billion) for the April-September half, with the banking unit accounting for 79 per cent of the overall gains.

Japan Post Bank logged a parent-only net profit of 158.1 billion yen, up 5.3 per cent on the year. Valuation losses on asset holdings declined thanks to the recovery in stock prices, and investment returns also improved. This unit's net profit eclipsed the 140.9 billion yen of the largest private-sector bank, Mitsubishi UFJ Financial Group Inc. (TSE:8306).

The entire group's pretax profit surged 19.5 per cent to 505 billion yen. But net profit declined partly because the parcel delivery joint venture between mail unit Japan Post Service Co. and Nippon Express Co. (TSE:9062) posted a loss of about 24 billion yen.

For the full fiscal year through March 2010, Japan Post upgraded its net profit forecast to 430 billion yen.

The government intends to require that Japan Post continue providing uniform banking and insurance services nationwide, but there are concerns that offering the same level of service in unprofitable regions could lead to higher costs and hurt overall earnings.

After taking the reins at the end of last month, Japan Post President Jiro Saito called the government plan for the firm's financial services an extremely difficult issue. Some lawmakers in the ruling coalition now argue that the requirement for uniform service should be limited to such basic operations as settlements and remittances.