(15 May 2015 – Japan) Sumitomo Mitsui Financial Group (SMFG) forecast a higher profit as domestic and international loan growth help make up for shrinking interest margins.
SMFG said net income will increase 0.8 percent to ¥760 billion ($7.7 billion) in the year ending 31 March.
According to Bloomberg the average estimate of 13 analysts was for a profit drop to ¥736 billion.
SMFG president Koichi Miyata said the next year will be a good one for lending with more Japanese companies tipped to make capital investments.
Profit for the year ended 31 March fell 9.8 percent to ¥753.6 billion, SMFG said.
Net interest income, or revenue from lending minus payments on deposits, rose 1.4 percent last fiscal year to 1.5 trillion yen, the Tokyo-based bank said.
Fees and commissions climbed 1.2 percent to 997 billion yen. Net trading and other operating income gained 11 percent to 476 billion yen.
The difference between deposit and lending rates at Sumitomo Mitsui’s main banking unit narrowed by eight basis points from a year earlier to 1.29 percent in March, it said.
The pace of declines in interest margins has eased but the trend remains, Miyata said. Credit growth abroad has been making up for the narrower margins, he said.
The lending unit had 19.3 trillion yen of loans outstanding overseas as of March, a 22 percent increase from a year earlier.
Releasing the banks forecast outlook on 13 May, Miyata told reporters in Tokyo that Japan’s economic rebound under Abenomics had finally spread to smaller companies.
“Domestic lending is clearly turning around and capex demand is solidly increasing as company earnings improve.”