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Acom Cuts 2010 Forecast to Loss on Swelling Interest Refunds

Nov. 9 (Bloomberg) -- Acom Co., Japan’s biggest consumer lender by market value, cut its earnings forecast to a second year of losses in anticipation of higher repayments of overcharged interest.

Acom projects a loss of 50.9 billion yen ($630 million) in the year ending March 31, the company said in a statement filed to the Tokyo Stock Exchange today. That compares with a loss of 7.24 billion yen last year and the lender’s previous profit forecast of 26.2 billion yen for this year.

Tokyo-based Acom joins Promise Co. in setting aside more reserves to repay overcharged interest after the September bankruptcy of rival Takefuji Corp. spurred claims from borrowers. The forecast revision comes a day after Aiful Corp. retracted its full-year outlook, citing “uncertain elements” surrounding its business even after unexpectedly posting a profit in the first six months.

Operating expenses for the parent company will likely increase to 240 billion yen, 61.7 billion yen higher than the previous forecast, due in part to increased reserves for interest repayments, Acom said in the statement.

Acom and its rivals are struggling amid a four-year clampdown on coercive lending. The government tightened credit rules in June, capping interest rates at 20 percent and limiting loans to a third of a borrower’s annual income.

The company posted a loss of 43.9 billion yen for the six months ended Sept. 30, compared with a profit of 2.44 billion yen a year earlier, according to the statement.

Slumping Interest Income

Interest income from loans fell 14 percent to 102.8 billion yen in the six months from 120 billion yen a year earlier, said Acom, an affiliate of Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank. Writedown of Mitsubishi UFJ shares that Acom holds was another reason behind first-half losses.

Mitsubishi UFJ’s shares have dropped 23 percent in the past 12 months, while Acom has declined 39 percent.

Acom slid 2.1 percent to 840 yen at the close of trading in Tokyo today before the earnings release. Smaller rival Aiful surged 32 percent, the biggest gain since March 2009, to 66 yen following its profit report.

Aiful posted net income of 3.4 billion yen in the six months ended Sept. 30, compared with an earlier forecast of a 3.2 billion yen loss, as interest income increased, the Kyoto-based lender said in a preliminary earnings statement yesterday.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net.

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net.

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