Improved Profits by 2.7% during April-June at the Major Five Japanese Banking Conglomerates
In the second quarter of 2025, Japan's five major banking groups experienced a 2.7% increase in combined net profits, reaching 1,374.8 billion yen. This growth was primarily driven by several factors, enhancing the financial health of the sector.
One of the key contributors was improved revenue growth and profitability in core banking businesses. A rebound in income from key operations such as lending and fee businesses was observed across the groups.
Cost reductions also played a significant role. Lower interest expenses and operating expenses were noted, with Norinchukin Bank witnessing a sharp decline in both ordinary expenses and interest costs compared to the previous year.
Controlled credit risks were another factor contributing to higher operating income. Despite increasing loan loss provisions in anticipation of risks, Japan’s megabanks managed a strong profit growth in the previous fiscal year.
Moreover, a sector-wide improvement in financial performance metrics was observed. The major megabanks saw a 25.3% net income rise to JPY 3.93 trillion in the fiscal year ending March 2025, which spilled over into Q2 performance.
Related financial groups like Rakuten and SBI Group also reported growth in their core segments, including banking, fintech, and mobile, contributing to cash flow and profits. However, it's important to note that these groups are distinct from the major traditional banks.
Sumitomo Mitsui Financial Group Inc.'s net profit expanded by 1.5% to 376.8 billion yen, while Mizuho Financial Group Inc.'s net profit increased by 0.4% to 290.5 billion yen. Sumitomo Mitsui Trust Group Inc.'s net profit grew by 36.2% to 90.8 billion yen, and Resona Holdings Inc.'s net profit grew by 27.3% to 70.5 billion yen in the first quarter of fiscal 2025.
However, the net profit of Mitsubishi UFJ Financial Group Inc. in the first quarter of fiscal 2025 was not provided, nor was the net profit of Resona Holdings Inc. in the full year to March 2026. Additionally, the net profit of all five major Japanese banking groups for any quarter after June 2025 was not provided, nor was the net profit of the groups for the full year to March 2026.
For the full year to March 2026, Mizuho Financial Group Inc. expects its group net profit will total 1.02 trillion yen, marking the first time Mizuho's net profit will exceed 1 trillion yen for a full year. The net profit of the three groups (Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc., and Sumitomo Mitsui Trust Group Inc.) hit record highs since their establishment.
In summary, the main contributing factors to the profit increase were revenue growth from core activities, expense reductions (especially interest and operating costs), and controlled credit risks, all leading to higher operating income for major Japanese banks in Q2 2025.
The growth in net profits for Japan's major banking groups in Q2 2025, attributable to enhanced revenue streams from core banking businesses, cost reductions, and managed credit risks, resulted in improved financial performance within the industry. Furthermore, related financial groups, such as Rakuten and SBI Group, also reported growth in their core segments, which contributed to gains in cash flow and profits, signifying a positive trend in the broader business and finance sector, including banking and insurance.
