Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group will detail how much the Bank of Japan’s commitment to raise borrowing costs could help profit margins in the midst of uncertainty sparked by U.S. tariffs.
The central bank stood pat earlier this month after a cycle of rate hikes since March 2024 and halving its economic growth outlook to 0.5% for this fiscal year. While the BOJ pushed back the timeline for reaching its 2% inflation target citing increased uncertainty from the trade war, Governor Kazuo Ueda emphasized that the adjustment doesn’t necessarily imply a delay in future rate hikes.
MUFG earlier raised its guidance for the fiscal year ended in March. MUFG and Mizuho had already achieved 100% of their guidance by the end of the third quarter, while SMFG stood at 98%, Morningstar analyst Michael Makdad said. All three lenders are projected to beat guidance unless they report net losses for the fourth quarter, he added. They are slated to post strong growth in net fee and interest income.
“Expect all three megabanks to exceed their guidance for the just-ended year, but I think the market’s focus is completely on the forward outlook and not results,” Makdad added. Anticipation for Japanese lenders’ shareholder returns, including share buybacks, have likely shifted lower amid the trade war, SMBC Nikko said.
