TOKYO: Japan’s second-largest bank Sumitomo Mitsui Financial Group posted a 42.6% rise in third-quarter net profit on Monday as a continued recovery in economic activity from the coronavirus pandemic boosted its core lending business. reported that it did.
As the government steadily normalized social and economic activities, lenders saw strong loan demand from businesses and reduced the level of loan loss reserves.
The depreciation of the yen due to the widening interest rate differential between Japan and the United States also pushed up overseas profits.
SMFG posted a profit of ¥240.6 billion ($1.3 billion) for the October-December period, compared with a profit of $168.7 billion. That brings the nine-month total to a record high of his ¥766 billion, nearly matching his full-year profit forecast of ¥770 billion.
However, SMFG held back on raising its annual outlook, citing recession concerns in the US and Europe and uncertainty over the war in Ukraine.
This forecast is below the average of 794.8 billion yen in 12 analyst estimates compiled by Refinitiv.
SMFG shares have surged about 20% since the Bank of Japan abruptly adjusted its bond yield control in late December, and the decision could prompt the central bank to change its interest rate policy soon. expectations were born.
A departure from ultra-loose policy would widen spreads between deposit and lending rates, boosting core earnings for Japanese banks that have been under pressure for years at bottom interest rates.
SMFG estimates that if the policy rate is raised from the current minus 0.1% to zero, it will have a positive impact of ¥30 billion on net interest income.
($1=129.4600 yen)