Japan's megabanks post record profits as deflation ends

Japan's third-largest lender Mizuho Financial Group reported a 661 percent surge in fourth-quarter net profit to 228.7 billion yen ($1.44 billion) for the January-March period, compared to 30.1 billion yen a year earlier, while also booking its highest-ever annual net profit of 1.25 trillion yen ($7.88 billion). The results, released Friday, included a profit forecast of 1.3 trillion yen for the financial year ending March 2027 and a 100 billion yen share buyback program. Japan's largest banking group Mitsubishi UFJ Financial Group (MUFG) also posted record-breaking results, logging a 438 percent jump in fourth-quarter net profit to 613.7 billion yen ($3.87 billion) and achieving annual net profit of 2.43 trillion yen ($15.34 billion) for the financial year to March 2026. MUFG became the third of Japan's megabanks to register record annual profit, following Sumitomo Mitsui Financial Group which posted its own record profit and raised its forecast to 1.7 trillion yen for the next financial year. Analysts attributed the robust performance to Japan's exit from deflation, which has spurred corporate demand for growth financing including mergers, acquisitions and capital expenditure. The Bank of Japan's three interest rate hikes since March 2024 have widened lending margins, with Mizuho's loan and deposit rate margin expanding to 1.1 percent from 0.92 percent a year earlier. Mizuho's domestic loan balance grew to 57.8 trillion yen from 56.9 trillion a year earlier, demonstrating the sector's resilience despite market volatility following sweeping U.S. tariff announcements under President Donald Trump.