MUFG Mitsubishi UFJ Financial Group Inc

Japan's Sumitomo Mitsui Financial Group Inc. said its profit in the fiscal first half was hit by a slowdown in emerging markets driven by weak commodity prices.

The country's second-largest lender by market capitalization reported a 19% drop in net profit to ¥ 388 billion due to increased credit costs and impairment losses from its investments in Indonesia.

"Because of instability in emerging markets, we will be more cautious about credit expansion [in the region]…and will keep an eye on an economic slowdown in China [and] falling resources prices," SMFG's president, Koichi Miyata, said at a news conference. Mr. Miyata said the bank saw a decrease in lending in Thailand, China and South Korea.

The Tokyo lender booked an impairment loss of ¥ 55 billion from Indonesian lender PT Bank Tabungan Pensiunan Nasional, in which it raised its stake to 40% last year.

Meanwhile, Mitsubishi UFJ Financial Group Inc., Japan's largest lender, reported a slight gain in net profit to ¥ 599.32 billion from ¥ 578.72 billion a year earlier, boosted by a strong performance in the U.S. and investment gains from its 20% ownership stake in Morgan Stanley.

Despite its increase in overall overseas lending, MUFG also saw a drop in lending in some Asian countries. But MUFG President Nobuyuki Hirano said his company, which runs Thailand's Bank of Ayudhya, doesn't see a big impact from the recent market turmoil and falling resources prices on its business.

"Our customers are Japanese companies operating business in Asia and non-Japanese companies with high credit ratings so I don't think we'll be hurt by the recent events," the president said.

Meanwhile, net profit at Mizuho Financial Group Inc. rose 8% to ¥ 384.2 billion thanks to solid growth in its overseas operations and fee business. Mizuho President Yasuhiro Sato also said the bank, which has provided financing for global megamergers and acquisitions, has a proven record in its fee business overseas in areas such as bond issues.

Despite the economic slowdown in Southeast Asia, the top executives of the three banks see potential growth in the region over the long term.

"We won't pay a high price and will consider investment returns and deals in Asia," Mr. Sato said.

Write to Atsuko Fukase at atsuko.fukase@wsj.com

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(END) Dow Jones Newswires

November 13, 2015 07:55 ET (12:55 GMT)

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