Japan’s No 2 and No 3 banks post drops in Q4 net profit

JAPAN’S second- and third-largest lenders by assets reported a drop in fourth-quarter net profit on Monday (May 15).

Sumitomo Mitsui Financial Group (SMFG), the second-largest bank, posted a profit of 39.82 billion yen (S$391.4 million) in the three months through March, compared with 81.84 billion yen in the year-earlier period, Reuters calculations based on the bank’s filing show. This represents a 51.3 per cent year-on-year decline.

The banking group expects net profit to rise 1.8 per cent to 820 billion yen for the current business year, compared with the average 842.50 billion yen forecast by 14 analysts.

Meanwhile, Mizuho Financial Group (MFG), Japan’s third-largest lender by assets, reported a 76.4 per cent fall in fourth-quarter net profit, to 12.25 billion yen (S$120.4 million) in the three months through March. This was down from 51.82 billion yen in the year-ago period, according to Reuters calculations based on the bank’s filing.

The banking group expects 610 billion yen in net income for the current business year, higher than the average 591.81 billion yen forecast by 14 analysts.

A stronger economic recovery has supported brisk lending.

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In the US, higher rates are prompting borrowers to shift to banks for loans and away from bond issuance, pushing up net interest margins, or interest earned on loans versus interest paid to depositors.

Provisions for credit losses are expected to remain subdued. SMFG expects to set aside 230 billion yen to cover potential loan losses, compared with 210 billion yen a year earlier.

In the longer term, the lender said it is aiming for an annual net profit of 900 billion yen by the year ending March 2026 and one trillion yen or more by the year ending March 2029. REUTERS