TOKYO: Mitsubishi UFJ Financial Group (MUFG), Japan’s biggest lender, said first-quarter profit skidded nearly a third as the Bank of Japan’s negative interest rates slashed returns on loans without coaxing firms to ramp up new borrowing and stoke growth.
Reiterating a downbeat annual forecast for its lowest net profit in six years, MUFG said on Monday its April-June net profit fell 32 per cent from a year earlier to Y188.9 billion ($A2.44 billion). That trailed an average estimate of Y234.5 billion from two analysts polled by Thomson Reuters. Three years into BOJ Governor Haruhiko Kuroda’s aggressive campaign to end deflation, MUFG’s weaker earnings echoed those reported last week by Japan’s second-biggest bank, Mizuho Financial Group, and No3-ranked Sumitomo Mitsui Financial Group.
Underlining the headache faced by Kuroda and Prime Minister Shinzo Abe as they seek to shake Japan out of economic torpor, central bank data shows average outstanding loans of major banks grew only 0.8 per cent year-on-year during the first quarter, while deposits grew 4.7 per cent. Monetary easing moves by major central banks, including the Bank of Japan’s negative interest rate policy, are hurting global lenders by driving down returns from loans and bond investments.
MUFG’s net interest income, a core measure of profits from lending, dropped 8 per cent year-on-year in the first quarter to Y502.1 billion. For the full-year through March, MUFG kept its net profit forecast unchanged at Y850 billion, down 11 per cent from the previous year, and its lowest since the Y583.1 billion it posted in the 12 months ended March 2011. The bank’s own forecast is well below an average estimate of Y930 billion in a poll by Thomson Reuters of 18 analysts’ forecasts.
