Japan’s megabanks brace for lower earnings growth on US uncertainties

They only expect a 7.9% net income growth, lower than the 25.3% previously.

Japan’s three megabanks are bracing for lower earnings growth in the current fiscal year on tariff uncertainties, reports S&P Global Market Intelligence.

Mitsubishi UFJ Financial Group Inc. (MUFG), Sumitomo Mitsui Financial Group Inc. (SMFG) and Mizuho Financial Group Inc. forecast aggregate net income for the fiscal year ending in March 2026 to grow by 7.9% to JPY4.24t.

The three banks’ aggregate net income rose by 25.3% to JPY3.93t in the fiscal year that ended on 31 March 2025.They have also increased their combined loan loss provisions to JPY790b, from JPY504b previously, in preparation for potential credit risks.

In separate statements, the CEOs of Mizuho and SMFG expressed concerns related to the US trade policy."We made a conservative plan, based on the unpredictability [of the US trade policy]," Mizuho CEO Masahiro Kihara said at a press conference on 15 May 

2025, where it tripled its credit costs to JPY140b.

SMFG’s group CEO Toru Nakashima, meanwhile, expressed concern that the Japanese yen's appreciation against the dollar, potentially resulting from Trump's policy, will harm his bank, according to a report by Yuzo Yamaguchi of S&P Global Market Intelligence.

MUFG CEO Hironori Kamezawa predicted that the Japanese economy may slow down in the second half of 2025 due to pressure from the unpredictable US trade policy, S&P said.