May 15, 2015 / 8:31 AM / 2 years ago

CORRECTED-Japan's MUFG posts record annual profit, driven by overseas growth

(Corrects denomination of analyst estimate in penultimate para to trillion from billion)

TOKYO, May 15 (Reuters) - Mitsubishi UFJ Financial Group Inc (MUFG), Japan’s largest lender by assets, reported a record annual profit for a second year in a row as its aggressive overseas expansion strategy paid off.

MUFG said on Friday net profit rose 5 percent to 1.03 trillion yen ($8.62 billion) for the year ended in March, slightly below an average estimate of 1.05 trillion yen in a poll of 19 analysts by Thomson Reuters.

Its results contrasted with those of the other two major lenders, which posted profit falls, hurt by ultra-low interest rates at home.

Japanese banks have been hit by a steady decline in interest rates at home amid the Bank of Japan’s massive monetary easing. They have been trying to offset that by actively building up loans and buying assets overseas.

MUFG, created from multiple mergers of banks in the late 1990s and early 2000s, is known for its aggressive overseas forays, with officials attributing at least some part of its acquisitive culture to the fact that one of its original banks was Bank of Tokyo, a specialised foreign exchange bank with a global network.

The bank made a series of bold bets during the height of the global financial crisis. In 2008, it paid $9 billion for a 20 percent stake in U.S. investment bank Morgan Stanley and bought out UnionBanCal Corp, the holding company for California-based UnionBank.

MUFG also acquired a 72 percent stake in Thai lender Bank of Ayudhya Pcl, known locally as Krungsri, for about $5.3 billion in 2013.

For the current financial year through March 2016, it expects net profit to fall 8 percent to 950 billion yen, below an average estimate of 1.07 trillion yen in a poll of 19 analysts by Thomson Reuters.

Japanese banks are known for their conservative profit forecasts. MUFG had forecast a 3.5 percent decline in net profit for the previous year. ($1 = 119.4500 yen) (Reporting by Taiga Uranaka; Editing by Muralikumar Anantharaman)

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