Japanese megabanks' annual profits fall as ultra-low rates take toll

Mizuho's profits plunged 83% to $877m.

Reuters reports that Japan's three mega-banks all reported lower annual profits, highlighting the challenges in navigating through the ultra-low interest rate environment engineered by the central bank.

Also readJapanese megabanks still reeling from lower net income

MUFG saw annual profits fall 12% YoY as lending margins continue to remain under pressure in addition to one-time charge the bank bore from the suspension of a new system development at a credit unit. “Our core profit fell for a fourth straight year. We had expected this, but the environment is very tough,” Kantesugu Mike, the chief executive of MUFG, told a media briefing.

Mizuho saw profits plunge 83% YoY to $877.22m (JPY96.6b) in the year through March 2019 which marks its weakest performance since 2008.

Also readJapanese banks hit by lower net interest income as loan demand dwindles

The ultra-low rates engineered by the BoJ have been eating away at the profitability of its lenders who struggle to turn a profit from their significant loan balances. 

Banks in the country are also grappling with a shrinking customer base as the country rapidly ages. The proportion of the population aged 65 and above set to account for a third of the population by 2030, according to UN projections. A rapidly ageing country presents a challenge to banks as retirees tend to draw down in savings and less risky investment products unlike younger populations that use more expensive banking products.

Here's more from Reuters

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Google Pay users can get up to a 20% cashback when they pay through SGQR.
It is exiting the retail banking business to refocus on corporate transactions.
NPL ratio is expected to rise to its highest since the 2009 financial crisis.
The latest licensed banks in Thailand have loan market share below 0.5%. 
The capital injection was approved by the State Bank of Vietnam.
RetireSavvy allows Singaporeans to adjust their retirement plans.
Its net promoter score rose 35% in 2021 from end-2020.
Chuchkina has 15 years of experience in the fintech industry.
Green projects have the potential to create over 1,350 jobs in the country.
Rapheal Mun will relocate from Singapore to London for her new role.
The new COVID surge that began in April may hinder GDP recovery.
Banking leaders admit that they are at risk of ceasing to exist in 5-10 years.