TOKYO - MITSUBISHI UFJ Financial Group, Japan's largest bank, reported a US$2.2 billion (S$3.2 billion) quarterly loss, its second in a row, hit by a damaging recession and hefty losses on its stockholdings, but it forecast a return to profit.

Mitsubishi UFJ, which last year paid US$9 billion for a 21 per cent stake in US investment bank Morgan Stanley, reported a January-March group net loss of 214.9 billion yen (S$3.2 billion). The bank made 322 billion yen a year earlier.

For the full year, MUFG lost a total of 256.95 billion yen, its first annual loss since forming in a 2005 merger.

Mitsubishi UFJ said it expects net profit of 300 billion yen this financial year, roughly in line with an average net profit estimate of 291 billion yen in a poll of 15 analysts by Thomson Reuters.

The outlook for Japan's top three 'mega-banks' is unlikely to improve in the near future, Macquarie Capital Securities said in a research report last week.

Japan's three largest banks together lost about 1.2 trillion yen in the year just ended.

Second-ranked Mizuho Financial Group last week reported a 588.8 billion yen loss for the year and said it may raise up to 800 billion yen in new capital. No. 3 lender Sumitomo Mitsui Financial Group lost 373.5 billion yen for the year.

Shares of Mitsubishi UFJ have gained 14 per cent so far this year, while Mizuho is down 10 per cent and Sumitomo Mitsui is off 2.7 per cent.

Shares of the bank finished up 4.2 per cent at 617 yen ahead of the results on Tuesday. Tokyo's index of bank stocks gained 2.3 per cent.

Mitsubishi UFJ does not provide quarterly figures. Reuters calculated the numbers by subtracting nine-month results from the full-year figures reported on Tuesday. -- THOMSON REUTERS