Three of Japan's four mega banks have announced healthy net profit figures for the six months to September.

Yet concerns remain about their efforts to deal with a bad debt burden - estimated at 50 trillion yen ($407bn; �258bn) - which is crippling Japan's banks and which has been blamed for the country's economic woes.

Along with the profit statements, the four banks also signalled the way ahead in their struggle to restructure, to get rid of risky assets, and to write off loans made to companies during the 1980s which the recipients will never be able to repay.

So regardless of how strong their profits have been during the first six months, the year as a whole is unlikely to measure up if the banks are serious about dealing with their deep-seated difficulties.

A trillion yen charge

Over the next few months, efforts by the world's largest bank by assets, Mizuho, to sort out its 5bn yen debt mountain will receive much attention.

Mizuho reported net profits of 39bn yen, a remarkable turn-around from a 264bn yen loss during the same period last year. But this was achieved largely due to decent earnings from bond investments.

UFJ President Sugihara said the bank is back in the black

Besides, aggressive debt write-offs in the months ahead and continuing weakness in the stock market are expected to send the bank back in the red for the year as a whole.

Mizuho predicted a net loss of 220bn yen for the year to March and said it expected loan-loss charges of 1.04 trillion yen for the full year, much higher than a previous estimate of 600bn yen.

Mixed picture

Japan's second largest bank, Sumitomo Mitsui Banking Corporation (SMBC) - which reported a 61% rise in net profits to 55.1bn yen - said its loan-loss charge could rise to 700bn yen this year, up 40% from a previous estimate.

Japan's number three bank, Mitsubishi Tokyo Financial Group, which took a 192bn yen loan-loss charge during the period, reported widening losses to 188.01 yen, partly due to poor stock market investments.

Mitsubishi Tokyo said its full-year figure would disappoint too as its loan-loss charges would continue to hurt.

The smallest of the four, United Financial of Japan (UFJ), reported net profits of 72.56bn yen, a sharp turn-around from a similarly large loss of 67.44bn yen during the same period last year.

UFJ said it would set up a new subsidiary to speed up its efforts to write off debts, though its loan-loss charge forecast remained unchanged at 480bn yen for the year.

Government involvement

The banks' bad debt portfolios are due for a re-examination by the Financial Services Agency under hard-core reformer Heizo Takenaka, the financial services and economy minister.

The examination would form part of Mr Takenaka's plans, with the reluctant blessing of Prime Minister Junichiro Koizumi, to speed up the bad debt cleanup process.

The banks' desperate struggle is more than merely a matter for the world of finance.

This is a society-wide problem which poses a threat to the stability of the Japanese economy.

Observers credit Japan's interest rates, which are effectively zero, for preventing a number of big-name company debtors from going bust in a spectacular fashion that would add to the worst unemployment in half a century.

Their debts are secured on property and shares that are now worth a fraction of their original value thanks to Japan's decade-long downturn.

The strain of sustaining such huge debts gone bad means banks are refusing to lend to smaller businesses, further crippling chances of economic recovery.

Meanwhile, the government is planning a 3 trillion yen supplementary budget.

But economists generally feel that even a much larger spending package - impossible, given Japan's immense public debt - would make no difference without root-and-branch reform.