Japan's MUFG posts near five-fold jump in Q1 profit

MITSUBISHI UFJ Financial Group reported a near five-fold jump in first-quarter profit on Tuesday (Aug 1), as a recovering domestic economy and higher interest rates abroad boosted lending income for Japan’s biggest bank.

The bank’s results also benefitted from the absence of losses related to the sale its US retail venture, MUFG Union Bank, which had dampened profits over the past year. It stuck to its full-year forecast for record profit.

MUFG is the third of Japan’s trio of “megabanks” to report solid profits for the quarter just ended, following results from smaller rivals Sumitomo Mitsui Financial Group and Mizuho Financial Group on Monday.

Investors are betting on an improving domestic outlook for Japanese lenders. The central bank announced a tweak to its cap on bond yields last week, raising the prospect that the world’s third-largest economy could finally be inching towards an exit from years of ultra-low interest rates.

Squeezed by low margins and a declining population at home, Japan’s big banks have instead hunted for growth abroad. Mitsubishi UFJ has a tie-up with Morgan Stanley, forged in the midst of the global financial crisis.

Mitsubishi UFJ said net income for the April to June period totalled 558.4 billion yen (S$5.2 billion), compared to 113.7 billion yen a year earlier.

SEE ALSO

Japan megabanks report solid Q1 profit amid hope of BOJ windfall

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

It maintained its record profit forecast of 1.3 trillion yen for the year ending March 2024. The annual forecast compared with the 1.33 trillion yen average of 12 analysts’ estimates compiled by Refinitiv.

The full-year forecast represents a 16 per cent increase on the previous year.

While the Bank of Japan’s move has yet to feed into lender’s quarterly results, shares of banks stocks are trading near an eight-year high in Tokyo and are up nearly 50 per cent over the last year. REUTERS