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(Bloomberg) — Japan’s biggest banks raised their annual profit forecasts to fresh records and unveiled plans to buy back shares, reaping the rewards from the nation’s rising interest rates and buoyant stock market.
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Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. now project a combined ¥3.7 trillion ($24 billion) in profit this fiscal year after first-half results were boosted by lending income and gains from sales of shareholdings.
The results underscore how the Tokyo-based lenders are benefiting from the Bank of Japan’s interest-rate increases following years of ultra-easy monetary policy. They’re also willing to share more of their swelling profits with investors and stepping up their reduction of so-called strategic shareholdings of other firms.
In its first buyback since 2008, Mizuho plans to repurchase as much as ¥100 billion in shares through mid-March and cancel them. Chief Executive Officer Masahiro Kihara said the bank’s capital has finally returned to the point where it can boost shareholder returns.
“We used to take a balance between capital buildup and growth investment,” Kihara said at a briefing in Tokyo on Thursday. “Now, we take a balance between shareholder return and growth investment. We’re in a new dimension.”
Sumitomo Mitsui is planning ¥150 billion in buybacks. The lender decided to do the share buyback as it currently isn’t expecting to undertake large-scale M&A this fiscal year, CEO Toru Nakashima said at a briefing.
MUFG, meanwhile, plans to buy back up to ¥300 billion of shares through March 31. “Our return-on-equity level is not enough,” MUFG CEO Hironori Kamezawa said, when asked what Japan’s biggest bank needs to do more. “We need to boost it further, otherwise we cannot compete with global top-tier” banks.
Key Figures
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MUFG, Japan’s biggest bank, now sees net income reaching ¥1.75 trillion in the year ending March 31, up from its previous forecast of ¥1.5 trillion. First-half profit jumped 36% to ¥1.3 trillion.
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Sumitomo Mitsui revised its profit goal to ¥1.16 trillion from ¥1.06 trillion. Net income climbed 38% to ¥725.2 billion in the first half.
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Mizuho raised its profit forecast to ¥820 billion from ¥750 billion. Net income rose 36% in the first half to ¥566.1 billion.