Japanese megabanks raised their full-year estimates on earnings and dividends after a strong fiscal first half while maintaining a cautious outlook on economic recovery.
Mitsubishi UFJ Financial Group Inc. now expects record net profit of ￥1.05 trillion for the fiscal year ending March 2022, up 23.5% from its previous estimate. Sumitomo Mitsui Financial Group Inc. also raised its full-year estimate by 11.7% to ￥670 billion, and Mizuho Financial Group Inc. increased its projection by 3.9% to ￥530 billion.
Among the trio, Mizuho increased its target full-year per-share dividend by the most, up 6.7% to ￥80 from ￥75 previously. It was followed by SMFG, which raised target per-share payout by 5% to ￥210 from ￥200, and then MUFG whose target was up by ￥1 to ￥28.
"The economy is gradually recovering [from the pandemic]," Hironori Kamezawa, MUFG's CEO, said during a Nov. 15 press conference. "But overall, we're cautious about the outlook [for our business]."
The world's third-largest economy contracted faster than expected in the third quarter. Global supply chain disruptions hit exports and business spending, while the ongoing pandemic continued to weigh on consumer sentiment, analysts said.
"We still can't be optimistic about the prospects for the economic recovery," Tatsufumi Sakai, MFG's CEO, told a press conference Nov. 12.
MUFG reported a write-back of loan loss provisions totaling ￥17.9 billion for the fiscal first half, reversing ￥258.4 billion of loan loss provisions a year ago. SMFG's credit cost fell sharply to ￥26.7 billion from ￥200.2 billion a year earlier, while Mizuho's provisions dropped to ￥49.6 billion from ￥81.2 billion.
Following the improvement in asset quality the fiscal first half, MUFG cut its target loan loss provisions to ￥150 billion for the 12 months through March 2022 from its previous target ￥350 billion. SMFG cut the projection to ￥200 billion from ￥300 billion, while Mizuho's estimate remained unchanged at ￥100 billion.
For the fiscal first half that ended Sept. 30, MUFG reported ￥781.4 billion in net profit, the highest first half on record, nearly doubling from ￥400.8 billion a year earlier. MUFG's strong performance for the April-to-September period was mainly boosted by profits from its affiliate Morgan Stanley, which accounted for nearly 30% of the megabank's total net profit.
SMFG posted a 68.8% surge in net profit to ￥456.1 billion during the same period. Its wholesale and global businesses were the main drivers, while its retail and market operations were sluggish.
Mizuho's net profit rose 78.9% to ￥385.6 billion in the six months ended Sept. 30. It said retail and corporate businesses as well as global corporate operations boosted its earnings.
"We're returning to the pre-pandemic situation and we will shift into a higher gear," Jun Ohta, SMFG's CEO, told a press conference Nov. 12.
As of Nov. 12, US$1 was equivalent to ￥113.88.