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.