Four of Japan’s five major banking groups posted lower profits for the year through March 31, due largely to the worsening business performance of major borrower Toshiba Corp. and extremely low interest rates, according to earnings reports.
The five banks, including the three mega-bank groups — Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. — logged a combined ¥2.52 trillion in net profit, down 3.8 percent from a year earlier.
The net profit fell for the third straight year, as the Bank of Japan’s negative interest rate policy ate into income from lending and growing fears about Toshiba’s possible bankruptcy prompted private banks to boost their loan loss reserves.
MUFG, Japan’s biggest lender, reported a 2.6 percent drop in group net profit to ¥926.44 billion, hurt by declining trading gains from U.S. government bonds due to falls in their prices.
Mizuho reported a 10.0 percent decrease in net profit to ¥603.54 billion, dented by sluggish sales of investment trusts and insurance products.
SMFG’s group net profit, meanwhile, rose 9.3 percent to ¥706.52 billion, marking the first climb in three years thanks to a solid performance by its securities brokerage unit and consolidation of a corporate financing firm.
The net profit of Resona Holdings Inc. slipped 12.2 percent to ¥161.49 billion, while that of Sumitomo Mitsui Trust Holdings Inc. dropped 27.2 percent to ¥121.45 billion.
Combined operating profit from the five groups’ core banking operations fell 15.4 percent to ¥2.53 trillion.
For the business year ending next March, the combined net profit forecast by the five groups is ¥2.43 trillion, declining further from the just-ended fiscal year.