Japan's top 3 banks to log record profit on high overseas interest
(How about ZIRP interest rates from the BoJ and a currency at just about 34 year lows…no it couldn’t be ANY of that…they will keep buying yen because they have to. I’ve seen an article or two that blamed “speculators” for muh yen crash-also someone else’s fault not poor and loose monetary policy for far too long)
Japan's top three banking groups are expected to report a record combined net profit of around 3 trillion yen ($19.3 billion) for the year ended in March 2024, as higher interest rates overseas improved margins on lending operations.
The number would mark a 20% jump from the previous year and would be the highest since Japan's banking industry was consolidated into the three top players in fiscal 2005.
Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group will announce full-year earnings on Wednesday. Previously announced profit estimates totaled 2.86 trillion yen. The highest profit to date for the three was about 2.5 trillion yen for the fiscal year ended March 2014.
With low interest rates weighing on earnings, the three banking groups have been consolidating branch networks and working to lift earnings from corporate lending operations. This would mark the fourth straight year of profit increases since the year ended March 2021.
Rising U.S. interest rates have improved interest margins on overseas operations. As the U.S. Federal Reserve raised interest rates, the gap between lending rates and procurement costs widened, boosting interest income.
The weaker-than-expected yen helped boost yen-denominated overseas revenues earned on foreign currencies. "Profits look stronger than real earnings power," as one bank executive put it. Backed by solid earnings, borrowing demand remains strong among domestic companies. Capital spending was brisk for improving business efficiency and decarbonization. Funding demand also came from mergers and acquisitions.
M&A in Japan in 2023 was at a five-year high of about 23 trillion yen, up 47% from the previous year, according to LSEG. The Bank of Japan ended its negative interest rate policy in March (BARELY and its at 0.01% so big fuggen deal) The impact of higher domestic lending rates on bank earnings will not be reflected at least until results for the fiscal year ending in March 2025. With more interest rates hikes seen as a possibility this year, banks could get an added tailwind to businesses.
https://asia.nikkei.com/Business/Finance/Japan-s-top-3-banks-to-log-record-profit-on-high-overseas-interest