By Anton Bridge
TOKYO (Reuters) -Japan’s three largest banking groups posted record annual net profit in the last financial year, benefitting from increased corporate activity due to the end of deflation in Japan.
Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group booked a net profit of 1.86 trillion yen ($12.76 billion), 1.18 trillion yen and 885 billion yen, respectively, in the 12 months ended March 2025.
The banks also expected to grow their coffers further over this financial year – forecasting record profits once again – even though the economic outlook has been muddied by U.S. President Donald Trump’s sweeping global tariffs.
Japan’s banks have been among the largest beneficiaries of the end of deflation in Japan, which has encouraged Japanese companies to borrow for growth investments at home and abroad and carry out mergers and acquisitions.
The return of inflation also pushed the Bank of Japan to end its policy of negative interest rates in March 2024 and hike rates twice thereafter, raising lending margins for Japanese banks.
MUFG forecast a net profit this year of 2 trillion yen, SMFG projected 1.3 trillion yen and Mizuho 940 billion yen.
The uncertainties surrounding the tariffs have been factored into the banks’ forecasts.
Mizuho estimated a 110 billion yen hit to its bottom line in the current financial year while SMFG calculated a 100 billion yen impact as a result of the uncertainty at its results announcement on Wednesday.
Mizuho’s pipeline of equity capital markets and mergers and acquisitions deals is currently backed up as the shifting business conditions make decision making on large-scale investment challenging, Mizuho chief executive Masahiro Kihara told a press briefing in Tokyo.
But the banks expect the impetus for growth investment among Japanese companies to continue and each has extensive overseas operations across different financial services including retail and investment banking, asset management and wealth management.
“We have operations across Japan, Asia and the Americas with varied sources of profit, so we are strong in any business environment,” MUFG chief executive Hironori Kamezawa said at a press briefing.
MUFG owns some 24% of U.S. bank Morgan Stanley, a business alliance which began in 2008. The holding contributed more than a quarter of MUFG’s net profit over the year.
Asia has also been a growth market for the banks. Most recently SMFG announced last week its acquisition of a 20% stake in India private lender Yes Bank.
But the tariff uncertainty means SMFG too is holding off on further acquisitions, SMFG CEO Toru Nakashima said on Wednesday.
($1 = 145.7900 yen)
(Reporting by Anton Bridge; Editing by Tom Hogue and Jacqueline Wong)
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