Mitsubishi UFJ Financial Group Inc. raised its profit forecast to a record ¥1.86 trillion ($13 billion) for the fiscal year ended March, capitalizing on Japan’s first interest rate hikes in 17 years.
The upgraded outlook represents a 25% increase from the previous year’s earnings and exceeds MUFG’s earlier projection of ¥1.75 trillion, according to a statement Wednesday. The bank plans to announce full results on May 15.
Rising interest rates from the Bank of Japan’s policy shift have improved the company’s long-slumping loan margins, while reversals of loan loss provisions and strong performance from its U.S. partner Morgan Stanley bolstered profits.
The banking giant increased its pretax profit forecast to ¥2.66 trillion from ¥2.5 trillion previously and raised its year-end dividend to ¥39, bringing the annual payout to ¥64 — a 56% jump from last year’s ¥41.
Despite these gains, MUFG downgraded its net business profit projection by 18% to ¥1.59 trillion after writing down unrealized losses on foreign bonds, which reached ¥1.01 trillion in December due to rising U.S. rates.
The bank continues divesting cross-shareholdings, having sold ¥225 billion worth by December as part of a three-year plan to offload ¥700 billion in such holdings.
