Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group all forecast record profits for the year started in April, after the country’s central bank ended its policy of negative interest rates.
MUFG, Japan’s largest lender, expects net income of ¥1.5 trillion ($9.6 billion), a 0.7% increase from the previous year. SMFG aims for a 10% increase to ¥1.06 trillion and Mizuho expects profit to gain 10.5% to ¥750 billion.
The banks are benefiting from an earnings boost following the Bank of Japan’s shift in March. Big banks, including the three, have about ¥200 trillion at the central bank reserve and with the annual 0.1% interest on the amount beyond the minimum requirement, they earn about ¥200 billion.
At SMFG, net income surged more than fourfold to ¥170 billion, in the fiscal fourth quarter ended in March. Earnings were helped by strong loan demand, driven by a pickup in corporate client activity. Mizuho’s fourth-quarter net income more than tripled to ¥36.7 billion.
"Everything worked favorably for the banking business,” SMFG Chief Executive Toru Nakashima said at a briefing.
The end of the BOJ’s negative rates policy raised SMFG’s net interest income by ¥40 billion and it will gain another ¥40 billion for each increase of 10 basis points in the policy rate. Mizuho said the end of negative rates added ¥45 billion to its profit.
Both MUFG and SMFG plan to buy back about ¥100 billion worth of their own shares. SMFG also plans to raise its dividend by ¥60 to ¥330 per share.
Mizuho Chief Executive Masahiro Kihara said the bank would not do a share buyback until it built up sufficient capital reserves for investing in its growth strategy.
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