Two of Japan’s largest lenders posted profits that beat analysts’ forecasts in their fiscal first quarter, marking a solid start to the year that is projected to deliver bumper results.
(Bloomberg) — Two of Japan’s largest lenders posted profits that beat analysts’ forecasts in their fiscal first quarter, marking a solid start to the year that is projected to deliver bumper results.
Sumitomo Mitsui Financial Group Inc. said net income for the quarter ending June 30 was 248 billion yen ($1.75 billion), above an average estimate of 236.1 billion yen by six analysts. This was about 1.8% lower than the same period a year ago.
Mizuho Financial Group Inc.’s net income was 245.2 billion yen in the same period, an increase of about 54% from a year earlier, according to the company’s filing. That compares with an average estimate of 159.5 billion yen by four analysts.
Unlike banks in the US and elsewhere, Japanese lenders have yet to see interest rate hikes at home with the central bank sticking for now to its negative interest rate policy under new governor Kazuo Ueda.
Still the country’s bank stocks have risen sharply this year on hopes of the eventual policy pivot. They had extended these gains after the Bank of Japan loosened its grip on bond yields on Friday, a move seen by many investors as akin to policy tightening that may help boost banks’ earnings. The Topix bank index has rallied to an eight-year high.
Net interest income at Sumitomo Mitsui fell 2.6% to 420.5 billion yen, while it fell 14% to 217.6 billion yen at Mizuho, Japan’s third-largest lender.
Bad loan costs at Sumitomo Mitsui and Mizuho remain subdued during the first quarter, even with a pickup in the number of bankruptcies in Japan following the end of the government’s pandemic relief.
The two banks kept their annual profit projections that were set earlier in the year. Sumitomo Mitsui’s net income forecast of 820 billion yen for the year ending March 2024 would be its biggest in the past 10 years, while Mizuho’s predicted net income of 610 billion yen would be its most in eight years.
Japan’s largest lender Mitsubishi UFJ Financial Group Inc. will announce its results on Tuesday.
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