The company, one of three Japanese "megabanks," said Tuesday that net profit for the April-September fiscal half fell to 92.02 billion yen ($955.6 million) from 256.72 billion yen a year earlier.

Revenue fell 10 percent to 2.93 trillion yen ($30.4 billion), and operating profit declined 62.2 percent to 188.12 billion yen ($1.95 billion yen).

Japanese financial firms have suffered far smaller subprime mortgage losses than their Western counterparts, but they too are being squeezed by the global financial crisis and volatile equity markets.

The company, known as MUFG, also said it plans to issue 634.8 million new shares to shore up its balance sheet.

Compounding the increase in problem loans and losses on investments in securities, the bank went on a spending spree this autumn, expanding its global reach by snapping up stakes in financial companies beaten down by the credit crunch.

The lender invested $9 billion for a 21 percent stake in Morgan Stanley and this month completed the purchase of UnionBanCal Corp., now a wholly owned subsidiary.

MUFG's credit costs during the half increased 25 percent to 334.9 billion yen "due to credit rating changes which reflected a domestic and overseas economic slowdown and deterioration of corporate performance."

Securities-related losses totaled 75.2 billion yen compared with a gain of 54.4 billion yen a year earlier.

Falling sales of financial products such as derivatives also weakened the bottom line.

For the full year through March, Japan's biggest bank by assets expects net profit to tumble 65.4 percent to 220 billion yen on revenue of 5.9 trillion yen.

Main rivals Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. have also reported slumps in first-half profit and downgraded their earnings projections for the year.

In trading Tuesday, MUFG retreated 6.7 percent on the Tokyo Stock Exchange before the earnings release. Selling accelerated in the afternoon on share glut concerns after a Nikkei financial daily report triggered speculation about the new share issue.

MUFG's earnings are based on Japanese accounting standards.