A woman enters a Sumitomo Mitsui Banking Corp. branch in Tokyo in November. | BLOOMBERG

Business / Corporate

SMBC ups pay for first time in 19 years

Bloomberg

Sumitomo Mitsui Financial Group Inc.’s lending unit has agreed to raise salaries for the first time in 19 years as an economic recovery spurs profit at Japan’s second-largest bank by market value.

The company will increase base pay by 0.5 percent in the coming financial year starting Tuesday, in line with a request by its labor union, a spokesman for Sumitomo Mitsui Banking Corp. said Thursday. Bonuses will also rise, by 5 percent, he added.

The bank follows manufacturers from Toyota Motor Corp. to Hitachi Ltd. in increasing pay as Prime Minister Shinzo Abe calls for companies to boost wages to help sustain the economy’s rebound. Without higher incomes, Japanese households face declining spending power as the artificial inflation being stoked by the Bank of Japan’s aggressive monetary easing program takes hold, and the sales tax rises 3 points next month.

Japanese banks halted salary increases in the mid-1990s, when bad loans soared and deflation began plaguing the economy after a stock and property market bubble imploded. The 2008 global financial crisis further deterred lenders from raising pay as lenders focused on bolstering capital and restoring profits.

Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui and Mizuho Financial Group Inc. achieved 91 percent of their combined annual profit target in the first nine months of the year ending Monday.

Combined net income totaled ¥2.1 trillion, close to their full-year goal of ¥2.26 trillion, which would be the most since the three-megabank regime formed in 2005. Sumitomo Mitsui’s nine-month profit totaled ¥704.7 billion, 94 percent of its full-year forecast of ¥750 billion.

LATEST BUSINESS STORIES

A U.S. flag flies on a U.S. consulate car with the backdrop of buildings in the Lujiazui financial district, outside a hotel where U.S. trade negotiators are staying in Shanghai July 30. U.S. tariffs on China won't fix the trade deficit, and neither will weakening the dollar through interest rate cuts, International Monetary Fund economists said Wednesday.

Despite Trump's balanced budget boast, report shows U.S. deficit will exceed $1 trillion next year: The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump an...

Customers are seen through the window of a coffee shop in Burbank, California, Aug. 8. The U.S. job market isn't quite as strong as originally believed, with revised figures showing that the economy had 501,000 fewer total jobs this March than initially reported.

U.S. has 501,000 fewer jobs than first reported, suggesting consumer spending slide: The U.S. job market isn't quite as strong as originally believed — with revised figures showing that the economy had 501,000 fewer total jobs this March than initially reported. The Labor Depart...

U.S. Federal Reserve Chairman Jerome Powell speaks at a July press conference after a Federal Open Market Committee meeting in Washington President Donald Trump resumed his attacks on Powell Wednesday, blaming him for keeping the economy from growing much faster.In yet another Twitter screed, Trump said, "The only problem we have is Jay Powell and the Fed. He's like a golfer who can't putt, has no touch."

Fed chief Jerome Powell may signal future rate cuts but their effectiveness in doubt: The economy is slowing, the trade war is raging and the president is repeatedly attacking. Under the glare of a spotlight, Chairman Jerome Powell may signal Friday what the Federal Reserve will ...