Japan's three largest banking groups - Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group - have posted record annual profits, driven by the end of deflation, increased corporate investment, and three interest rate hikes since March 2024.
MUFG reported a 30% rise in net profit to 2.4 trillion yen ($15.3 billion) for the year ended March. Mizuho's net profit surged 41% to 1.25 trillion yen. Both exceeded consensus estimates. SMFG also posted a 34% profit increase earlier this week.
The banks forecast continued growth, with MUFG expecting a 12.5% rise, Mizuho a 4% increase, and SMFG a 7.4% climb for the current fiscal year.
However, the outlook is clouded by geopolitical tensions in the Middle East and risks in global private credit markets. MUFG CEO Junichi Hanzawa warned that rising oil prices could negatively impact their bottom line if Middle East tensions escalate.
Mizuho's domestic loan balance grew 1.6% to 57.8 trillion yen, with its loan and deposit rate margin improving to 1.1%. Both Mizuho and MUFG announced share buybacks of 100 billion yen, while SMFG announced a 180 billion yen buyback.