By Anton Bridge and Miho Uranaka TOKYO (Reuters) – Sumitomo Mitsui Financial Group’s CEO said the firm may make more than 1.2 trillion yen ($7.65 billion) net profit in the year from next April, as a resurgent Japanese banking sector cashes in on efforts to diversify income sources abroad alongside interest rate normalisation. The forecast […]
By Anton Bridge and Miho Uranaka
TOKYO (Reuters) – Sumitomo Mitsui Financial Group’s CEO said the firm may make more than 1.2 trillion yen ($7.65 billion) net profit in the year from next April, as a resurgent Japanese banking sector cashes in on efforts to diversify income sources abroad alongside interest rate normalisation.
The forecast exceeds its previous record target of 1.16 trillion yen for this year, even as higher interest rates in Japan and the mass offload of cross-shareholdings have bolstered the current year’s results.
“If we do as we have been, we should exceed 1.2 trillion next year,” SMFG Chief Executive Officer Toru Nakashima told Reuters in an interview.
At its second-quarter earnings results in November, Japan’s second-largest lender by assets recorded a gain of 196 billion yen on the sale of equity holdings. This came primarily from disposing of cross-shareholdings, which Nakashima said had inflated the bottom line.
“We can’t bet on that. In five years’ time, they will have disappeared,” he said.
SMFG has seen gross profit grow across all its business segments and Nakashima expects this to continue as large Japanese corporate clients expand abroad and carry out mergers and acquisitions, as well as capital investments.
“Domestic business opportunities are really increasing,” he said.
SMFG’s online banking app Olive has also exceeded expectations and is expected to make a profit ahead of schedule in this financial year, Nakashima said.
But the group must seek out new opportunities over the next mid-term plan period, starting in April 2025, so that its profits do not fall when the sales of cross-shareholdings dry up, Nakashima said.
“It’s not enough. I want to achieve continuous profit growth.”
($1 = 156.9600 yen)
(Reporting by Anton Bridge; Editing by Nicholas Yong)
