Regional banks posted a 68 percent rise in parent-only net profit for April-June from a year before thanks to higher stock prices, according to a tally of their earnings data.
Combined net profit at Japan’s 105 regional banks totaled ¥350 billion in the fiscal first quarter.
A stock market rise during the period led to a fall in valuation losses on shareholdings and an increase in capital gains. As a result, the stock-related earnings balance improved by ¥140 billion, almost the same as the margin of growth of the combined bottom line at the 105 banks.
Backed by the strong results, Bank of Fukuoka parent Fukuoka Financial Group Inc., Shizuoka Bank, Shiga Bank, Hyakujushi Bank and Minami-Nippon Bank raised their earnings projections for the April-September first half or for the full year, or both.
For April-June, core banking profit at the 105 lenders rose 6 percent, hiked by brisk commission revenue mainly from sales of investment trust funds.
Profit from Japanese government bond trading slumped 21 percent as the market turned volatile after the Bank of Japan adopted aggressive monetary easing April 4 that featured a sharp increase in JGB purchases.
The key 10-year JGB yield fell to a record low of 0.315 percent just after the BOJ started massive JGB purchases, but it jumped as high as 1.000 percent in May.
A handful of banks that managed to sell bonds at high prices around the time of the BOJ action enjoyed bond trading profit growth. But about 70 percent of the 105 banks saw their bond profit fall or incurred bond trading losses.
Profit from loan operations was sluggish, with a 1 percent rise. Seventy banks saw their loan balances shrink during the three months to the end of June.
When the BOJ adopted the aggressive monetary easing policy in April, it said the move would encourage commercial banks to shift funds away from JGBs to other assets, such as loans. But the latest earnings results show the shift never materialized.