US Top News and Analysis | Japan’s megabanks post record profits, but analysts warn growth may slow as risks mount
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Japan’s three megabanks – Mitsubishi UFJ, Sumitomo Mitsui and Mizuho – posted record annual profits for the fiscal year ended March 2026, with MUFG’s net profit up 30% to 2.4 trillion yen and SMFG and Mizuho posting 34% and 41% gains respectively, driven by higher yen rates, strong corporate funding demand and robust fee income. However, analysts warn that earnings growth is likely to moderate as credit costs rise, competition for deposits intensifies, and geopolitical risks—particularly tensions in the Middle East that could lift oil prices—loom, prompting banks to allocate more capital for balance‑sheet expansion. Forecasts suggest MUFG’s profit growth may fall to about 5% by fiscal 2027, SMFG’s to 9% through fiscal 2028, while Mizuho’s net‑interest‑margin gains could ease from fiscal 2027 as global interest rates ease. Despite the structural improvements from higher domestic rates and corporate activity, the sustainability of these record profits is uncertain amid mounting risks.
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