{"id":3787,"date":"2026-05-21T06:46:08","date_gmt":"2026-05-21T06:46:08","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/japans-megabanks-post-record-profits-but-analysts-warn-growth-may-slow-as-risks-mount\/"},"modified":"2026-05-21T06:46:08","modified_gmt":"2026-05-21T06:46:08","slug":"japans-megabanks-post-record-profits-but-analysts-warn-growth-may-slow-as-risks-mount","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/japans-megabanks-post-record-profits-but-analysts-warn-growth-may-slow-as-risks-mount\/","title":{"rendered":"Japan\u2019s megabanks post record profits, but analysts warn growth may slow as risks mount"},"content":{"rendered":"\n<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108256804\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>The yen gained on Wednesday following a rally in Japan&#8217;s equities and bets on more fiscally responsible policies after Prime Minister Takaichi&#8217;s election win.<\/p>\n<p>Yevgen Romanenko | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Japan&#8217;s largest banks posted record annual profits in their latest financial results, but earnings growth could slow as credit costs rise and geopolitical risks cloud the outlook, analysts say.<\/p>\n<p><span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-1\">Mitsubishi UFJ Financial Group<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, the country&#8217;s largest lender, said net profit rose 30% from a year ago to 2.4 trillion yen for the fiscal year ended March 2026, a record high for the third consecutive year.<\/p>\n<p>Similarly, <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-3\">Sumitomo Mitsui Financial Group<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>\u00a0and <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-4\">Mizuho Financial Group<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> also reported record annual profits in their latest earnings, rising\u00a034%\u00a0and\u00a041% from a year ago, respectively. <\/p>\n<p>&#8220;Higher yen rates are improving lending margins and supporting net interest income, while healthy corporate funding demand and stronger fee income are adding to revenue,&#8221; said Kaori Nishizawa, Director of Banks at Fitch Ratings.  <\/p>\n<p>Nomura reiterated its bullish stance on Japan&#8217;s major banks and named Sumitomo Mitsui and Mizuho as its top picks. The three megabanks \u2014 Mitsubishi UFJ,  Sumitomo Mitsui and Mizuho \u2014 still &#8220;look undervalued relative to the strength of their earnings,&#8221; Nomura said. <\/p>\n<p>However, analysts said the lenders could struggle to keep profits at record levels. <\/p>\n<p>&#8220;Earnings growth is likely to moderate,&#8221; said Nishizawa, noting that recent upside has come from one-off items, including market-related gains and contributions from acquisitions. <\/p>\n<\/div>\n<div role=\"region\" aria-labelledby=\"Placeholder-ArticleBody-Video-108280086\">\n<div role=\"button\" tabindex=\"0\" id=\"Placeholder-ArticleBody-Video-108280086\" class=\"PlaceHolder-wrapper\" data-vilynx-id=\"7000407103\" data-test=\"VideoPlaceHolder\">\n<div class=\"InlineVideo-videoEmbed\" id=\"InlineVideo-0\" data-test=\"InlineVideo\">\n<div class=\"InlineVideo-wrapper\">\n<div class=\"InlineVideo-inlineThumbnailContainer\"><span class=\"InlineVideo-videoButton\"\/><span\/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Banks also face\u00a0higher credit costs, competition for deposits and pressure from broader macroeconomic and geopolitical risks, according to Nishizawa.<\/p>\n<p>&#8220;As such, sustainability of profit growth at current levels is likely to be challenged,&#8221; she added. <\/p>\n<p>The earnings improvements appear more structural than in previous cycles, driven by higher domestic interest rates, inflation and stronger corporate funding demand, said Koichi Niwa, an analyst at UBS.<\/p>\n<p>Stronger wholesale and corporate finance activity has benefited large Japanese banks and helped lift recent earnings amid renewed investor interest in the sector, Niwa said.<\/p>\n<p>But financing mergers and acquisitions, large corporate lending, overseas loans and structured transactions often require more capital than domestic lending.<\/p>\n<p>&#8220;As a result, even if profits are growing, banks also need to allocate more capital to support balance-sheet expansion,&#8221; he added. <\/p>\n<p>Lorraine Tan, director of equity research in Asia for Morningstar, expects Mitsubishi UFJ&#8217;s earnings growth to slow to 5% from fiscal 2027, as global interest rates  outside Japan are expected to ease. <\/p>\n<p>&#8220;This, coupled with slowing contributions from associate Morgan Stanley, should eat into domestic   growth,&#8221;  Tan added. <\/p>\n<p>Tan also expects Sumitomo Mitsui&#8217;s earnings growth to slow to 9% through fiscal 2028, citing its exposure to a loan book with around 35% outside Japan, while Mizuho&#8217;s net interest margin gains could ease from fiscal 2027 as interest rates outside Japan resume an easing cycle.<\/p>\n<p>Meanwhile, the Japanese lenders are also keeping a close eye on developments in the Middle East, which could weigh on their earnings outlook.<\/p>\n<p>Junichi Hanzawa, MUFG&#8217;s chief executive, said at a recent earnings briefing that the bank&#8217;s bottom line could be negatively impacted if Middle East tensions continue to build. A further rise in oil prices before year-end could also weigh on global economic growth. <\/p>\n<p>&#8220;Middle East-related risks, including potential spillover effects, are partly provisioned for and remain closely monitored,&#8221; Sumitomo Mitsui said in an earnings filing.  <\/p>\n<p>Mizuho also said that it &#8220;will continuously monitor the external environment &amp; its potential impacts, and flexibly revise [its] financial outlook if necessary going forward.&#8221; <\/p>\n<\/div>\n<div class=\"ArticleBody-googlePreferredSourceContainer\" data-module=\"GooglePreferredSource\" data-id=\"RegularArticle-GooglePreferredSource-5\">Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The yen gained on Wednesday following a rally in Japan&#8217;s equities and bets on more fiscally responsible policies after Prime Minister Takaichi&#8217;s election win. Yevgen Romanenko | Moment | Getty Images Japan&#8217;s largest banks posted record annual profits in their latest financial results, but earnings growth could slow as credit costs rise and geopolitical risks [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3788,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[561,770,3414,3415,3417,1282,621,1055,1872,3416,772],"class_list":["post-3787","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-analysts","tag-growth","tag-japans","tag-megabanks","tag-mount","tag-post","tag-profits","tag-record","tag-risks","tag-slow","tag-warn"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/3787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=3787"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/3787\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/3788"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=3787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=3787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=3787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}