Japan’s two largest banking groups on Friday slashed their full-year net profits forecasts by more than half, blaming their disappointing performance on rising bad loan costs and a sharp downturn in share prices.

Mitsubishi UFJ Financial Group (MUFG), Japan’s largest banking group, said net profits would be 66 per cent lower than previously forecast, at Y220bn ($2.2bn), on lower ordinary income of Y2,900bn, as a result of lower fee and trading income, impairment losses on stocks and higher credit costs.