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TOKYO (Reuters) -Sumitomo Mitsui Financial Group Inc, Japan’s second-largest bank, on Monday reported an 8% increase in second-quarter net profit and raised its profit outlook as improved economic conditions have boosted lending.
Sumitomo Mitsui (NYSE:SMFG) posted a profit of 272.99 billion yen ($1.96 billion) in the July-September period versus 252.8 billion yen a year earlier, according to Reuters’ calculations based on six-month cumulative figures disclosed in a stock exchange filing.
For the full year through March, Sumitomo Mitsui revised its profit forecast to 770 billion yen from 730 billion yen, compared with the 753 billion yen average estimate of 13 analysts compiled by Refinitiv.
Smaller rival Mizuho, meanwhile, posted a 29% increase in quarterly net profit.
Sumitomo Mitsui said demand for loans remained solid in Japan and in the United States. A rebound in spending also lifted the bank’s credit card and consumer finance business units.
Still, Sumitomo Mitsui Chief Executive Jun Ohta took a cautious tack, telling a briefing that concerns about the outlook were building.
“A recession in the United States and Europe would potentially spread to Asia. The state of the markets, and the outlook will become more difficult to read. We need to be even more prudent,” he said.
Meanwhile, a valuation loss on overseas bond holdings stood at 1.05 trillion yen at the end of September, an increase from 729.6 billion yen at the end of June.
The lender also said it would buy back up to 4.4% of its own shares, worth up to 200 billion yen.
Sumitomo Mitsui and other major Japanese banks have invested heavily in foreign bonds, mainly U.S. Treasuries, in search for higher returns amid ultra-low interest rates at home.
Even though they have cut their exposures since last year, the faster-than-expected pace of monetary tightening by the U.S. Federal Reserve has caused unrealised losses on their Treasury holdings.
($1 = 139.5100 yen)
