TOKYO -- Combined net profit at Japan's three megabanks likely shrank about 30% in the April-June quarter due to meager earnings from lending operations amid the Bank of Japan's negative interest rate policy.
Mitsubishi UFJ Financial Group's figure fell just short of 190 billion yen ($1.81 billion), and Sumitomo Mitsui Financial Group earned between 180 billion yen and 190 billion yen -- both down by around 30% on the year. Mizuho Financial Group's net profit apparently tumbled 20% or so, coming to between 120 billion yen and 130 billion yen. The combined tally of around 500 billion yen compares with roughly 700 billion yen a year earlier.
The negative rate policy, introduced in February, has shrunk the spread between lending and deposit rates. In addition, investors curtailed purchases of mutual funds and other instruments in light of stock market declines and the yen's appreciation this year.
Market investment, including foreign exchange and bond trading, generated hefty revenues but not enough to absorb the adverse impact.
For the full year, MUFG projects a net profit of 850 billion yen, while SMFG and Mizuho expect to generate 700 billion yen and 600 billion yen, respectively.
No substantial revisions to the full-year forecasts appear necessary for now. But megabanks could take a further hit from growing uncertainty overseas, including Britain's decision to leave the European Union.