Land of the rising banks
Live MintJapan’s gradual exit from its ultra-easy monetary policies has helped send Japanese banks into overdrive, with the Topix Banks index more than doubling in the past two years. Japan’s three megabanks—Mitsubishi UFJ, Sumitomo Mitsui and Mizuho—have all reported record profits for their fiscal years ended in March and are forecasting another record year. Bloated balance sheets have dragged down returns: Japanese megabanks’ returns on average equity was only around 6.5% in the latest fiscal year, compared with 16% for JPMorgan Chase, according to S&P Global Market Intelligence. Probably, but if the Japanese banks can continue to ride the tailwind from the country’s rising interest rates while improving their own balance sheets, that gap has plenty of reason to narrow.
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