Japan’s largest lender MUFG logs 6% growth in third-quarter profit

[TOKYO] Japan’s Mitsubishi UFJ Financial Group (MUFG) rounded off a strong third quarter for Japan’s megabanks in booking a 6 per cent rise in Q3 net profit, it said on Wednesday (Feb 4).

MUFG’s smaller rivals Sumitomo Mitsui Financial Group and Mizuho Financial Group posted quarterly growth of 12 per cent and 14 per cent, respectively, at their earnings results earlier this week and last week.

Cashing in on the long-awaited end of negative interest rates in Japan, robust loan demand and improved loan-to-deposit spreads means each lender is well on track for record profits they have forecast for this financial year.

After three quarters, MUFG hit 86 per cent of its annual profit forecast of 2.1 trillion yen (S$17.1 billion) for the year ending March 2026.

It has no plans to amend the forecast, although risk factors include potential economic policy changes brought in after the upcoming general election, Takayuki Hara, managing director and head of MUFG’s CFO office, told a press briefing.

The banking group generated 520.6 billion yen in net profit in the October-to-December period, compared with 490.7 billion yen over the same period the previous year.

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As the banks struggled to eke out returns in Japan, they looked abroad in search of higher yields. MUFG’s overseas loans totalled 53.1 trillion yen at the end of December as compared to 77.1 trillion yen for domestic loans.

The spread on overseas loans has stayed steady at around 1.4 per cent over the past four quarters, considerably higher than domestic spreads, which were 0.65 per cent for large corporate clients and 0.63 per cent for small and medium-sized enterprises at the end of December.

MUFG recently acquired 20 per cent of Indian non-bank lender Shriram Finance, which MUFG’s leadership sees as a means of lifting group profitability further. REUTERS