Sumitomo Mitsui Financial Group on Friday reported a 12% increase in third–quarter net profit, benefiting from rising interest rates in Japan.
The country’s second largest banking group generated net profit of 461 billion yen ($3 billion) for October-December, up from 410.8 billion yen in the same period the previous year.
The group maintained its annual profit forecast of 1.5 trillion yen for the year ended March 2026, having raised it from 1.3 trillion yen in November.
The bank has already reached 93% of this year’s profit target with one quarter to go. An SMFG spokesperson told a press briefing that given geopolitical risks and market conditions the group will stick with this target.
SMFG hit a record 1.18 trillion yen net profit in the year ended March 2025.
Japan’s banking sector has been among the largest beneficiaries of a return of inflation to the country that pushed the central bank to end eight years of negative interest rates.
The Bank of Japan raised the base rate to 0.75% in December and SMFG estimates each 25 basis-point increase boosts its annual earnings by 100 billion yen.
The central bank’s two interest rate rises in 2025 will add 130 billion yen to net interest income in the year ended March 2026, SMFG said in a presentation.
Its loan balance stood at 109.7 trillion yen at the end of December and the domestic loan to deposit spread rose to 1.15% over the quarter from 1.08% in the April-June period.
A surge in Japanese government bond yields is also expected to give a boost to SMFG. The bank said it was rebuilding its bond portfolio, having cut its JGB holdings to 6.4 trillion yen at the end of December from 11.1 trillion yen six months prior.
Fellow “megabanks” Mitsubishi UFJ Financial Group and Mizuho Financial Group – Japan’s largest and third largest lenders, respectively – report earnings next week.
Reuters
