Japanese megabank deposits lag loans as funding gap threatens lending capacity

M&A involving Japanese companies rose 8.8% in 2025.

Japanese megabanks’ deposits are growing at a slower rate than their loans, a trend that can potentially crimp their security investments and lending, according to S&P Global Market Intelligence.

Sumitomo Mitsui Financial Group’s (SMFG) deposits grew 2.7% year-on-year (YoY) in the October to December 2025 quarter, compared to a 3.4% loan expansion.

Deposits at MUFG grew 2.5% compared to a 5.1% growth in loans in the same quarter.

"It's hard to think the gap between growth of deposits and loans will shrink," Oshima said Hideo Oshima, a senior economist at Japan Research Institute, speaking with S&P Global Market Intelligence.

Capital demand will likely remain strong, and banks are eager to lead, according to Masahiro Ichikawa, chief marketing strategist at Sumitomo Mitsui DS Asset Management.

According to data from Recof, a Japanese M&A advisory firm, mergers and acquisitions (M&A) involving Japanese companies rose 8.8% to 5,115 deals in 2025.