By Anton Bridge
TOKYO (Reuters) -Mitsubishi UFJ Financial Group reported a near five-fold jump in first-quarter profit on Tuesday, as Japan’s largest lender was helped by higher interest rates abroad and robust profits from trading.
MUFG, one of the world’s largest lenders by assets, was also aided by the absence of valuation losses on bonds held by its former U.S.
retail venture MUFG Union Bank, which the group offloaded in December 2022.
It stuck to its full-year forecast for record profit of 1.3 trillion yen for the year ending March 2024, in line with the 1.33 trillion yen average of 12 analysts’ estimates compiled by Refinitiv.
The full-year forecast represents a 16% increase on the previous year.
MUFG is the third of Japan’s trio of “megabanks” to report solid profits for the quarter that ended June 30, following results from smaller rivals Sumitomo Mitsui Financial Group and Mizuho Financial Group on Monday.
Japan’s largest brokerage and investment bank, Nomura Holdings Inc, also reported strong earnings on Tuesday, driven by global investor interest in the outperforming Japanese stock market.
Investors are betting on an improving domestic outlook for Japanese lenders.
The central bank announced a tweak to its cap on bond yields last week, raising the prospect that the world’s third-largest economy could finally be inching toward an exit from years of ultra-low interest rates.
Squeezed by low margins and a declining population at home, Japan’s big banks have instead hunted for growth abroad.
Mitsubishi UFJ has a tie-up with Morgan Stanley, forged in the midst of the global financial crisis.
Mitsubishi UFJ said net income for the April to June period totalled 558.4 billion yen ($3.92 billion), compared to 113.7 billion yen a year earlier.
The bank was lifted by higher fees and commissions from foreign loans and an increase in sales and trading and its treasury business, thanks to volatile markets.
While the Bank of Japan’s move has yet to feed into banks’ quarterly results, shares of bank stocks are trading near an eight-year high in Tokyo and are up nearly 50% over the last year.
MUFG said in May an increase in the BOJ policy rate and the five- and ten-year government bonds yields would boost annual earnings by some 50 billion yen.
($1 = 142.6300 yen)
(Reporting by Anton Bridge; Editing by David Dolan and Miral Fahmy)
