Interest income and fees drive Japan bank profits up 32.7% to $37.25b

NPLs slightly increased although the NPL ratio dipped to 0.64%.

Japan’s major banks saw net profits jump 32.7% year-on-year (YoY) to $37.25b (JPY5.97t) in the fiscal year that ended in March 2026, according to the Financial Services Agency (FSA).

Growth in domestic net interest income, lifted by both higher loan volume and improved margins, raised the banks’ profits.

Growth in net fees and commissions such as those from wealth management business and loan-related businesses also lifted profits, the FSA said.

At the same time, the balance of non-performing loans (NPLs) slightly increased to $18.72b (JPY3t) as of 31 March 2026, from $18.1b (JPY2.9t) a year earlier.

The NPL ratio dipped to 0.64% in FY2026, from 0.67% the previous fiscal year.

Common equity tier 1 (CET1) capital ratios of four internationally active banking groups—Mizuho Financial Group, Mitsubishi UFH Financial Group, Sumitomo Mitsui Finance Group, and Sumitomo Mitsui Trust Group—fell to 12.51% in the 2026 fiscal year compared to 13.19% the previous year.

Capital ratios of domestically active funds—Resona Holdings, SBI Shinsei Bank, and Aozora Bank—is 11.42%, slightly lower than the 11.46% they recorded a year earlier.

(US$1 = JPY 160.25)