Japan’s biggest banks expect another year of record profit

[TOKYO] Mitsubishi UFJ Financial Group and Mizuho Financial Group forecast another year of profit growth, even as the Middle East conflict poses risks to Japan’s biggest banks and their clients. 

MUFG expects net income to climb about 11 per cent to a record 2.7 trillion yen (S$21.7 billion) in the year ending March 2027, Japan’s largest bank said in a statement on Friday. Mizuho forecasts profit will gain 4 per cent to 1.3 trillion yen, also an all-time high. 

The lenders joins Sumitomo Mitsui Financial Group in projecting that earnings will scale new heights as rising interest rates spur loan profitability. Still, the energy crisis stemming from the Iran war threatens to put a strain on Japan’s economy, which could curtail credit quality and demand.

MUFG and Mizuho both said they plan to buy back as much as 100 billion yen of shares. 

For the year ended March, MUFG’s net income climbed 30 per cent to 2.43 trillion yen. Mizuho’s profit rose 41 per cent to 1.25 trillion yen. It booked 54.7 billion yen in “forward-looking” reserves tied to uncertainty over the situation in the Middle East.

Earlier this week, Sumitomo Mitsui forecast annual profit to climb more than 7 per cent to 1.7 trillion yen. But CEO Toru Nakashima struck a cautious tone, saying his bank needs to be more selective in making loans given a slowdown in deposit growth.  BLOOMBERG