Japan's top banks'Q2 earnings leap as 'Abenomics' boosts equity holdings

Thu Nov 14, 2013 3:41am EST
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By Taiga Uranaka

TOKYO (Reuters) - Japan's top banks logged strong second quarter profit growth thanks to equity portfolios boosted by a surge in the Tokyo stock market, but other benefits of "Abenomics" have yet to spread to their core lending business.

Prime Minister Shinzo Abe's aggressive reflationary policies have pumped up the stock market since late 2012 -- the benchmark Nikkei average .N225 ended September 63 percent higher than a year earlier -- but bank lending is still struggling to recover, as companies remain reluctant to invest and consumer spending has lost steam.

A year after Abe took financial markets by storm with promises to revive a moribund economy, data showed growth slowed sharply and that his "Abenomics" policy mix is yet to secure a durable recovery.

Mitsubishi UFJ Financial Group (MUFG) (8306.T: Quote) and Mizuho Financial Group (8411.T: Quote), respectively Japan's largest and second largest lenders by assets, posted strong results on Thursday for the first half of the financial year.

For the six months ending in September, MUFG's net profit grew 83 percent from a year earlier to 530.2 billion yen ($5.33 billion), and Mizuho's grew 133 percent to 429.8 billion yen.

For the July-September quarter alone, according to Reuters' calculations, net profit rose 156 percent to 274.9 billion yen at MUFG, and totaled 181.8 billion yen at Mizuho, up from 356 million yen a year earlier, when Mizuho had booked hefty losses on its stock holdings.

Both banks were helped by small bad loan costs.

For the full-year ending in March, MUFG raised its forecast for net profit to 910 billion yen from 760 billion yen, above the 842.6 billion yen projection by Starmine's SmartEstimate.   Continued...

U.S. Treasury Secretary Jack Lew (L) shakes hands with Japan's Prime Minister Shinzo Abe at the start of their meeting at Abe's official residence in Tokyo November 12, 2013. REUTERS/Toshifumi Kitamura/Pool