Mufg's First: quarter profit climbs 48% on higher loan margins (updated)

Mizuho Financial

03/08/2026 08:29

Adds details and context throughout.
Japan's financial sector has benefited from the end of deflation
Biggest banks have forecast record earnings
Margins on loans have risen
By Anton Bridge
TOKYO, Aug 3 (Reuters) - Mitsubishi UFJ Financial Group 8306.T booked a 48% jump in first-quarter profit, it said on Monday, as strong loan demand linked to the end of deflation in Japan has boosted earnings across the sector.
Japan's largest lender by assets generated 809.4 billion yen ($5.2 billion) in net profit in the April to June quarter, compared with 546 billion yen over the same period a year previously.
Japan's banking sector has been among the greatest beneficiaries as the end of deflation has led Japanese firms to borrow to fund investments at home and abroad and finance capital expenditure and mergers and acquisitions.
All three of Japan's megabanks – Sumitomo Mitsui Financial Group 8316.T and Mizuho Financial Group 8411.T as well as MUFG – posted record annual income last year and have forecast new records for the year ending March 2027.
     
HIGHER INTEREST RATES AND HIGHER MARGINS
Higher interest rates have also pushed up margins on loans, adding to MUFG's profits. The spread between loans and deposits on domestic loans rose to 1.15% in the quarter, compared with 0.95% a year previously.
Overseas, MUFG's project finance business in the U.S. performed well due to strong demand from data centre projects.
It also benefited from its 24.2% holding in Morgan Stanley MS.N, which generated 222.2 billion yen in net income for MUFG over the quarter as the U.S. bank posted record revenue from deals activity and trading revenue at its investment bank.
MUFG similarly profited from market volatility and record high equity prices, which boosted trading revenue as well as asset management-related fees.
Japanese government bond yields have surged this year. However, many banks have yet to increase their JGB holdings or the duration of bonds they hold while yields remain on an upward trajectory, even as the Japanese government has encouraged savers and financial institutions to invest more in domestic assets.
MUFG increased its domestic bond holdings — primarily JGBs — by 1.37 trillion yen over the three months to the end of June, bringing its total holdings to 16.16 trillion yen.
The average duration of these holdings fell to 1.2 years from 1.5 years three months ago.    
($1 = 156.8100 yen)

(Reporting by Anton Bridge; Editing by Christian Schmollinger, David Holmes and Barbara Lewis)
((Anton.Bridge@thomsonreuters.com))