According to Zhizhong Finance APP, driven by the still strong domestic loan demand in japan and the profit margin increase after the Bank of Japan began raising interest rates in July, the three largest commercial banks in japan raised their fiscal year profit expectations to historical high levels on Thursday. These banks all announced their latest performance reports on Thursday, and after seven years of negligible loan profit margins due to negative policy rates, they are benefiting from higher borrowing costs.

Mitsubishi UFJ Financial Group, the largest commercial bank in japan by asset size, stated that due to rising interest rates and the increase in the scale of stock sales related to cross-shareholding, second-quarter profits soared by about 90%. Additionally, the bank raised its fiscal year net income expectations from the previous 1.5 trillion yen to 1.75 trillion yen (approximately 11.2 billion dollars).

The japanese government's measures to improve corporate governance rules are accelerating the pace of divestitures of inter-company cross-shareholdings, with some companies choosing to buy back the stocks they hold from strategic partners. Japan's banking giants still hold corporate client shares worth tens of billions of dollars; divesting these shares is expected to generate additional profits, especially as the japanese stock market is nearing historical highs.

Thanks to the rise in benchmark interest rates and significantly improved loan spreads, the bank generated higher interest income from retail and corporate loan businesses in japan.

Against the backdrop of japanese banks expanding overseas for many years, the weaker yen has boosted the value of overseas business earnings and provided another important impetus for the performance growth of japan's banking giants.

Thanks to the prosperity of the japanese stock market and the expansion of multinational investment scales, Mitsubishi UFJ Financial Group's asset and wealth management businesses have also achieved steady growth; however, the net income of its global investment banking business has declined due to persistently high global credit costs. Mitsubishi UFJ Financial Group stated that this fiscal year's target for return on equity is around 9%, which is expected to be achieved ahead of previous expectations.

The financial report released by japan's third-largest bank, mizuho financial group, shows that its net income for the second fiscal quarter of fiscal year 2024 increased by over 60% year-on-year, and it has raised its full-year profit forecast to a record 820 billion yen.

To emphasize this fruitful performance expectation, mizuho announced a share buyback of up to 100 billion yen, marking its first share buyback in 16 years, while also raising this fiscal year's dividend expectation by 15 yen to 130 yen.

"We have entered a new phase of growth investment and enhancing shareholder returns," said mizuho CEO masahiro kihara at a press conference.

After japan's central bank ended years of extreme monetary easing with negative interest rates in March, it began raising interest rates in July, raising the policy rate to 0.25%, which has significantly increased the interest margin between loans and deposits for major japanese banks such as mitsubishi ufj financial and mizuho over two consecutive quarters.

Mizuho financial group expects that the financial impact of the two interest rate hikes announced by japan's central bank during this fiscal year will be a positive 85 billion yen. Between July and September, mizuho reported a net income of approximately 277 billion yen, far exceeding the 170 billion yen of the same period last year.

Sumitomo mitsui financial group, ranked second in overall asset size in japan, raised its latest net income outlook for the fiscal year to a record 1.16 trillion yen after a staggering 27% profit increase in the second fiscal quarter.

Sumitomo mitsui financial group expects that the interest rate hike announced by japan's central bank is likely to lead to a total positive impact of 100 billion yen on its net interest income, of which about 70 billion yen of the positive impact will be realized by the end of March 2025.