* MUFG, Mizuho, SMFG book increased 9-month profit
* All three report domestic loan growth
* Increased loan growth follows on from Abenomics
By Taiga Uranaka
TOKYO, Feb 3 (Reuters) – Japan’s biggest banks, flush with
cash from a year-long stock market rally, are poised to benefit
this year from a spurt in loan growth at home fuelled by the
economic stimulus measures of Prime Minister Shinzo Abe.
Mitsubishi UFJ Financial Group Inc, Mizuho
Financial Group Inc and Mitsui Sumitomo Financial Group
Inc all booked increased lending in the latest quarter,
in a business that contracted before “Abenomics” kicked in at
the beginning of 2013.
Domestic loans at major Japanese banks grew 2 percent in
December for the quickest annual pace since 2009 and surpassed
200 trillion yen for first time in over three years, central
bank data show.
Lending is likely to pick up as around a quarter of Japanese
companies, according to a Reuters poll conducted last month,
plan to increase capital expenditure in the financial year
beginning in April.
In further positive signs, the central bank’s index of
business sentiment reached its highest in six years in the
latest quarter, and spending on machinery hit a five-year high.
Lending growth so far has been driven by funding for
large-scale acquisitions. MUFG is part-financing drinks maker
Suntory Holdings Ltd’s $13.6 billion purchase of U.S.
whiskey maker Beam Inc.
Other primary customers include utilities such as Tokyo
Electric Power Co who want funds to buy fossil fuels,
as nuclear plants are closed while the nation debates their
safety.
The larger lending volumes may help banks buoy earnings as
interest rates fall, with banks undercutting each other to win
the increased custom.
The average interest rate of Japanese banks on domestic
loans was 0.863 percent in December, a shade above the 0.821
percent of August which was the lowest since the central bank
began compiling the information at the end of 1993.
“I don’t expect to see an improvement in loan interest
margins in the near future,” said Naoko Nemoto, managing
director at Standard & Poor’s Ratings Japan.
ALTERNATIVE INCOME
Banks spent the majority of 2013 booking significant gains
from stocks, as share prices reached multi-year highs lifting
banks’ income from stock trading and brokerage commission.
Overall net profit at MUFG increased 47.5 percent to 785.4
billion yen in April-December.
Net interest income, or profit from interest on loans, grew
to 1.39 trillion yen in April-December, from 1.31 trillion yen a
year earlier.
The domestic corporate loan balance of MUFG grew 500 billion
yen, or 1.23 percent, over three months to 41 trillion yen at
December-end.
The earnings mirrored those of Mizuho and SMFG, where
9-month profit rose 43.7 percent and 28 percent respectively.
At Mizuho, domestic loans reached 55.8 trillion yen at
December-end from 55 trillion three months earlier.
Domestic loans edged up to 48.5 trillion yen at SMFG from
47.8 trillion yen during the same period.
(Reporting by Taiga Uranaka; Editing by Christopher Cushing)
