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 Mitsubishi UFJ Financial Group Inc <8306.T>, Mizuho Financial Group
Inc <8411.T> and Mitsui Sumitomo Financial Group Inc <8316.T> all
booked increased lending in the latest quarter, in a business that
contracted before "Abenomics" kicked in at the beginning of 2013.
Domestic loans at major Japanese banks grew 2 percent in December
for the quickest annual pace since 2009 and surpassed 200 trillion
yen for first time in over three years, central bank data show.
Lending is likely to pick up as around a quarter of Japanese
companies, according to a Reuters poll conducted last month, plan to
increase capital expenditure in the financial year beginning in
April.
In further positive signs, the central bank's index of business
sentiment reached its highest in six years in the latest quarter,
and spending on machinery hit a five-year high.
Lending growth so far has been driven by funding for large-scale
acquisitions. MUFG is part-financing drinks maker Suntory Holdings
Ltd's <SUNTH.UL> $13.6 billion purchase of U.S. whiskey maker Beam
Inc <BEAM.N>.
Other primary customers include utilities such as Tokyo Electric
Power Co <9501.T> who want funds to buy fossil fuels, as nuclear
plants are closed while the nation debates their safety.
The larger lending volumes may help banks buoy earnings as interest
rates fall, with banks undercutting each other to win the increased
custom.
The average interest rate of Japanese banks on domestic loans was
0.863 percent in December, a shade above the 0.821 percent of August
which was the lowest since the central bank began compiling the
information at the end of 1993.
"I don't expect to see an improvement in loan interest margins in
the near future," said Naoko Nemoto, managing director at Standard &
Poor's Ratings Japan.
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ALTERNATIVE INCOME
Banks spent the majority of 2013 booking significant gains from
stocks, as share prices reached multi-year highs lifting banks'
income from stock trading and brokerage commission.
Overall net profit at MUFG increased 47.5 percent to 785.4 billion
yen in April-December.
Net interest income, or profit from interest on loans, grew to 1.39
trillion yen in April-December, from 1.31 trillion yen a year
earlier.
The domestic corporate loan balance of MUFG grew 500 billion yen, or
1.23 percent, over three months to 41 trillion yen at December-end.
The earnings mirrored those of Mizuho and SMFG, where 9-month profit
rose 43.7 percent and 28 percent respectively.
At Mizuho, domestic loans reached 55.8 trillion yen at December-end
from 55 trillion three months earlier.
Domestic loans edged up to 48.5 trillion yen at SMFG from 47.8
trillion yen during the same period.
(Reporting by Taiga Uranaka; editing by
Christopher Cushing)
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