Japanese banks pay attention to earnings as Omicron highlights the risk of bad debts

Tokyo — All of Japan’s largest lenders on Wednesday are wary of the risks that Omicron variants may pose to their income, resurrecting concerns that a pandemic revival could cause more bad debts. I was allowed to.

This is a cool assessment from Japan’s top three lenders, the world’s largest lenders of assets, and that the latest coronavirus variants could put further downward pressure on the already vulnerable domestic economy. Was emphasized.

Top lender Mitsubishi UFJ Financial Group maintained its full-year net income forecast of 1.05 trillion yen ($ 9.16 billion), although profits in the third quarter increased 40% year-on-year to 1.07 trillion yen. ..

The annual forecast is compared with the average of 1.08 trillion yen of 11 analysts compiled by Refinitiv.

“We need to consider the possibility of booking reserves in a positive way, as chip shortages are impacting the supply chain and the outbreak of omicrons is clouding the economic outlook,” a MUFG spokeswoman said in a briefing. Stated.

Bank earnings have been in the last few quarters due to the release of cash from reserves set aside to address the potential flood of pandemic-related non-performing loans as government subsidies have highlighted many companies. Inflated over.

However, there was no such boost in the third quarter.

Credit costs at large banks have risen from the previous quarter, and provisions have been booked for some large borrowers amid concerns that the outbreak of Omicron could cool the economy’s up-and-coming consumer-led recovery. rice field.

The number of new COVID-19 cases in Tokyo exceeded 20,000 for the first time on Wednesday. We expect it to dim and peak the wave of Omicron infections. Most of the capital and Japan are currently being suppressed to contain the spread of the virus.

Sumitomo Mitsui Financial Group, the second largest bank in Sumitomo Mitsui Financial Group, posted net income of 168.7 billion yen in the third quarter, up 3% year-on-year.

Mizuho Financial Group, the third-largest creditor in Japan, posted net income of 93 billion yen, down 33% in the three months to December.

Both Sumitomo Mitsui Banking Corporation and Mizuho Bank maintained their full-year profit forecasts.

Banks are also expected to start raising interest rates in March by the Federal Reserve Board, citing risks associated with US monetary tightening policies.

A Mizuho spokeswoman said in a briefing, “We will manage our government bond portfolio carefully. There is a significant downside risk to the economy due to accelerated tightening.”

($ 1 = 114.6000 yen)

Makiko Yamazaki, Ritsuko Shimizu