Japan’s three biggest banks reported a surge in first-half profits this week that they said means the year will turn out better than expected. The second half won’t be as good.
Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. increased their combined net income target by 23 percent to 2.26 trillion yen for the year ending March, company statements showed. If they achieve the goal, second-half profit will fall 46 percent to 794.3 billion yen from the first six months’ 1.47 trillion yen and drop 43 percent from a year earlier.
The forecast for lower second-half earnings reflects the banks’ uncertainty over whether Prime Minister Shinzo Abe can sustain an economic recovery that’s been driven by government spending and a weaker yen. The Nikkei 225 Stock Average has slid from a more than five-year high in May, while expansion of output slowed last quarter as companies eased up on capital investment, signaling loan growth may remain muted.