Oct. 25 (Bloomberg) -- Resona Holdings Inc., Japan's fifth- biggest lender, said first-half profit fell 19 percent, beating its forecast as income from retail banking businesses was higher than expected and credit costs were lower.

Net income totaled 170 billion yen ($1.5 billion) for the six months ended Sept. 30, Resona said in a preliminary report to the Tokyo Stock Exchange. The bank in May estimated profit would total 110 billion yen. The bank will report audited earnings at a future date.

Resona said last month it would repay 200 billion yen of public funds it received in an industry bailout in 1999 and a bailout of the bank in June 2003. That would leave the lender still owing 2.9 trillion yen to the government.

``We still have a mountain of problems to deal with, but our earnings in the first half proved steady,'' Resona Chairman Eiji Hosoya said at a press conference in Tokyo.

Resona follows Mitsubishi UFJ Financial Group Inc. and Sumitomo Trust & Banking Co. in boosting earnings as recovery in Japan, the world's second-biggest economy, helped enable their borrowers to repay loans. Gross domestic product rose at an annualized pace of 3.3 percent in the second quarter.

Resona said its five banking units, including Resona Bank Ltd., made 32 billion yen more profit from core business including sales of investment trusts, and reduced credit costs by 27 billion yen, from the lender's estimates made in May.

This is cache, read story here