TOKYO: Earnings at five major Japanese banking groups diverged in the year ended March 31, with differences in growth strategies leading to higher profits at two and declines at the rest. Combined net profit shrank 3% on the year to 2.77 trillion yen ($23 billion), results reported by Friday show.
Mitsubishi UFJ Financial Group logged a 5% rise to 1.03 trillion yen, getting a boost from such acquisitions as Thai subsidiary Bank of Ayudhya. Overseas operations accounted for 45% of gross operating profit at banking units. For overseas operations, “we plan profit growth of over 30% over the next three years,” according to President Nobuyuki Hirano.
Sumitomo Mitsui Trust Holdings’ net profit jumped 16% to 159.6 billion yen, thanks to brisk sales of financial products amid the tailwind of the economic recovery. Commission income at unit Sumitomo Mitsui Trust Bank grew as funds under management increased, and a rise in wrap accounts also pushed up profit.Even among the trio whose profits worsened last fiscal year, signs of brighter days ahead are emerging.
Sumitomo Mitsui Financial Group’s net profit declined 10% to 753.6 billion yen. But the amount of outstanding loans at its core banking unit came to 68.2 trillion yen, marking an 8% rise that bested the other two megabanks under MUFG and Mizuho Financial Group. Although aggressive monetary easing is narrowing the interest rate spread between deposits and lending, the large volume is offsetting the impact to an extent. “Capital spending by corporations is creating big opportunities,” President Koichi Miyata said.
Mizuho Financial Group saw net profit drop 11% to 611.9 billion yen, but noninterest income from foreign exchange and other operations rose about 10% to 588 billion yen. It made more money from such services as fund settlement for borrowers.
“The business model of financial services is changing from simple lending to more general consulting,” President Yasuhiro Sato noted. Mizuho Securities got a boost from high stock prices, too.
And at Resona Holdings, net profit declined 4% to 211.4 billion yen. But sales of investment trusts and other products increased 4% to 1.6 trillion yen. As bold monetary easing keeps rate spreads narrow, major banks are being challenged to shift away from relying on profits on trading Japanese government bonds and cultivate new sources of earnings.
