Japan’s largest lender Mitsubishi UFJ Financial Group on Tuesday (Feb 4) reported a 32 per cent increase in quarterly net profit.
Profit in the October-December period came in at 490.74 billion yen (S$4.29 billion) versus 370.64 billion yen a year earlier, according to Reuters’ calculations based on nine-month cumulative figures disclosed in a filing.
MUFG has reached 99.9 per cent of its annual profit guidance of 1.75 trillion yen in the first nine months of the financial year, and is narrowly trailing the 1.841 trillion yen average annual estimate of 14 analysts polled by LSEG.
Rising interest rates at home, a buoyant stock market and a weak yen are fuelling profits, propelling MUFG’s share price to levels unseen since its 2001 listing.
Yet CFO Jun Togawa recognises that more needs to be done to sustain profit growth and catch up with global rivals to attract investors.
“We need to make growth investment constantly,” Togawa, 57, said. “We will do that considering the balance with shareholder returns.”
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The Tokyo-based bank has more room to invest in the business, given that profits and return on equity (ROE) are set to exceed goals envisioned in its medium-term business plan ending March 2027, he said.
The Bank of Japan’s (BOJ) rate hikes are spurring lending income that was squeezed by rock-bottom borrowing costs for more than a decade. Japanese banks have also been booking gains from sales of stakes in client companies as part of a campaign to cut cross-shareholdings. And the yen’s 26 per cent decline versus the US dollar in the past three years has boosted the value of earnings abroad, where MUFG has been expanding.
But Togawa said the bank is working to build up profit drivers that put it on a sustainable growth footing even without the help of these tailwinds.
“One of the keys to enhancing ROE is how much we can expand fee revenue, which doesn’t use our balance sheet,” he said. The bank’s investment in Asia’s financial technology startups is also expected to boost its future profits, he added.
Investors have been snapping up Japanese bank stocks. MUFG’s shares have climbed 38 per cent in the past 12 months, taking its market capitalisation to about US$150 billion, trailing only Toyota Motor as the country’s most valuable company. REUTERS, BLOOMBERG
