Japan’s megabanks plan $2.5 billion in buybacks

Bloomberg

Japan’s biggest banks announced plans to boost shareholder returns, including buybacks of as much as $2.5 billion as global rates hikes spurred an increase in income from loans that helped earnings beat analyst estimates.
Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. both said they will buy back shares while Mizuho Financial Group Inc. upped a dividend forecast.
The actions underscore how a push to expand overseas is paying off as interest rates rise, helping to offset ballooning paper losses on foreign bond holdings that widened to almost 4 trillion yen.
Japan’s largest banks are gaining from dollar revenues after the currency’s rise this year against the yen. US lending as well as bond trading are now acting as a counterweight, with more than half of the outstanding loans at the nation’s mega banks still denominated in yen. Japan’s interest rate is expected to remain near zero for the foreseeable future.
Sumitomo Mitsui’s chief executive officer Jun Ohta said loan demand from overseas clients grew as they sought to secure funds before further rate rises, though signalled that the pace of growth may slow. Rival MUFG, which last month said it plans to accelerate lending to global funds and other institutional investors in the US, also pointed to a boost from overseas growth.
Sumitomo Mitsui has been deepening an expansion overseas with a deal to increase its stake in a bank in the Philippines while starting an online lending venture in the US to counter slower growth in Japan.
Still, paper losses on foreign bond holdings widened as yields on US Treasuries and other securities continued to rise, though the banks have managed to partly offset the impact with hedges.
“Overall, it’s solid results,” Mizuho’s chief executive officer Masahiro Kihara said. “But for the rest of this fiscal year and the next, uncertain situations will continue and we will be on alert,” he said.