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Japan’s biggest banks on Friday warned of a bleaker outlook for the next six months as the resurgent pandemic slams economies, even as they reported first-half profits that exceeded expectations.

Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. raised their full-year profit targets, thanks mainly to strong results from trading and serving cash-strapped corporate clients in the six months ended Sept. 30. Sumitomo Mitsui Financial Group Inc. kept its forecast unchanged even after achieving two-thirds of the goal.

Stimulus measures taken by governments and central banks at home and abroad have helped to curtail an increase in bad-loan costs. Yet with coronavirus infections surging, the risk is that the crisis will linger and companies and households will be less able to repay their debts once the relief wears off.

The second half will be “very tough,” MUFG CEO Hironori Kamezawa said Friday. “There has been various government support in Japan and elsewhere and we need to carefully watch how it will lead to a solid economic recovery.”

MUFG, Japan’s biggest bank, raised its annual profit forecast to ¥600 billion ($5.7 billion) from ¥550 billion. Kamezawa said the upgrade reflects bigger revenues in overseas investment banking business including bond underwriting, along with better cost controls.

Sumitomo Mitsui reported first-half profit of ¥270.1 billion, representing 68% of its target for the year ending March. It refrained from raising its annual forecast because of “the continuing uncertain environment including the resurgence of COVID-19.”

“Initially, we thought most credit costs would materialize in the first half and subside in the second,” Sumitomo Mitsui CEO Jun Ohta said. “But potentially there are many risky borrowers and we can’t easily ascertain how much they will emerge in the second half” or even later, he said.

On Thursday, Mizuho raised its annual profit goal to ¥350 billion from ¥320 billion, based on a “steady” performance in the first half, both in trading and customer-facing businesses.

“The pace of economic recovery is slow and there are concerns about second and third waves of the pandemic,” Mizuho CEO Tatsufumi Sakai said. “Looking ahead, we need to be more cautious than before,” and keep ample provisions as a precaution, he said.

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