From Jubak's JournalA balance sheet that's become worth loving
Earnings gains are fleeting; improved balance sheets are forever. (Well, not really, but I think you know what I mean.) Mitsubishi UFJ Financial Group (MTU, news, msgs), the biggest Japanese bank in assets, showed record profits for the fiscal year that ended in March 2006, but more importantly to the pessimist, the bank reported a big improvement in its balance sheet.
By the end of June, the bank should complete paying back the last of the public money it received in the bailout of the Japanese banking sector. To make the last payment, Mitsubishi UFJ Financial will sell stock -- producing a dilution of about 3% in earnings per share.
Once that debt is off the company's books, however, the bank should be able to execute a share buyback program and raise its dividend. The bank now pays out an extraordinarily low 6% of income as dividends. (In contrast, Citigroup (C, news, msgs) pays out more than 40%.)