5 major bank groups’ consolidated net profits rise 30%

Jiji Press

13:26 JST, May 18, 2022

TOKYO (Jiji Press) — The combined consolidated net profits of five major banking groups in the fiscal year that ended in March grew 30.6% from the previous year to ¥2.647 trillion, their earnings reports have shown.

The figure hit the highest level in four years as the impact of novel coronavirus infections on economic activities waned from the previous year.

Meanwhile, the three megabanks under Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. booked more than ¥300 billion in loan-loss reserves linked to Russia, the target of economic sanctions by Japan, the United States and the European Union for its invasion of Ukraine.

The three also incurred heavy latent losses on securities stemming from falls in the value of foreign government bond holdings following higher U.S. interest rates. The other two banking groups are Sumitomo Mitsui Trust Holdings Inc. and Resona Holdings Inc.

Four of the five groups project net profit growth for the current year. But it is difficult to forecast how the war in Ukraine and higher resource prices will affect performance.

“The environment will remain uncertain and severe due to heightened geopolitical risks and wild fluctuations in interest rates and foreign exchange rates,” Mitsubishi UFJ Financial President Hironori Kamezawa told a press conference Monday.

In the latest year, Mitsubishi UFJ, Sumitomo Mitsui, Mizuho Financial and Sumitomo Mitsui Trust enjoyed net profit growth.

By contrast, Resona Holdings suffered a fall of 11.7% due to a loss on foreign bond sales.

The combined net core banking business profits at the five groups rose 5.4%, led by solid performance of their asset management services for retail investors and the mainline loan operations for Japanese and foreign companies.

Credit costs grew about 10% to a total of ¥802.3 billion chiefly because of an increase in loan-loss reserves for some major clients.