Kazuma Nagahara and Kentaro Otsuka

Yomiuri Shimbun Staff Writers

All three of Japan's megabanks--Mitsubishi UFJ Financial Group Inc. $(MUFG)$, Sumitomo Mitsui Financial Group Inc. $(SMFG)$ and Mizuho Financial Group Inc.--as of Thursday had announced their consolidated financial results for the fiscal year that ended March 2025. The three companies' total combined net income increased 25.3% year over year to 3.926 trillion yen, marking a record high for the second consecutive year.

Their strong performances were driven by robust lending and gains from selling cross-held shares. However, in the current fiscal year, which will end in March 2026, the banks are expected to face headwinds, including lower corporate earnings due to high U.S. tariffs.

"We have achieved solid growth in both quantity and quality," said MUFG President Hironori Kamezawa at a press conference on Thursday.

The net profits for each company were as follows: for MUFG, 1.862 trillion yen, a 25.0% year-on-year increase; for SMFG, 1.177 trillion yen, a 22.3% increase; and for Mizuho, 885.4 billion yen, a 30.4% increase. All of these numbers represented record highs.

The Bank of Japan's decision to end its negative interest rate policy and raise interest rates brought back a "life with interest rates" to Japan. This contributed to the companies' strong performances. "Last fiscal year, corporate lending in Japan grew by more than 7%. Japanese companies are becoming more vibrant and making various investments," said SMFG President Toru Nakashima, delighted that private-sector demand for funds had strengthened for the first time in a long while.

These strong performances were also boosted by efforts to improve capital efficiency by selling shares that had been held for purposes such as to maintain relationships with business partners. Selling shares contributed 600 billion yen to MUFG's profits, while it brought in 485 billion yen for SMFG and 200 billion yen for Mizuho.

The three companies are forecasting record profits again for the fiscal year ending in March 2026. MUFG expects its net profit to exceed 2 trillion yen for the first time, while SMFG expects 1.3 trillion yen and Mizuho expects 940 billion yen.

However, the reciprocal tariffs and additional tariffs of the administration of U.S. President Donald Trump are increasing uncertainty about the future. There is a growing risk that companies will hesitate to invest, which will lead to lower demand for funds. If borrowers' performance is expected to worsen, banks will need to increase loan loss provisions to prepare for loan defaults. This would increase expenses and put pressure on profits.

Mizuho expects high tariffs to take a 110-billion-yen bite out of its profits. "It is difficult for companies to make major investment decisions in an uncertain environment. Positive investment will stagnate," said President Masahiro Kihara on Thursday. He also described the full year forecast as "quite conservative." SMFG has also predicted that it will lose out on 100 billion yen in profits due to the impact of the Trump administration.

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This article is from The Yomiuri Shimbun. Dow Jones Newswires and The Wall Street Journal were not involved in the creation of this content.

(END) Dow Jones Newswires

May 18, 2025 22:57 ET (02:57 GMT)

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