Japan's megabanks raise annual earnings forecasts, flag data centre slowdown risk
SMFG•Sumitomo Mitsui Financial Group and Mizuho Financial Group raised their annual profit forecasts to 1.9 trillion yen and 1.6 trillion yen, respectively, and each set its share buyback programme at 400 billion yen. Their CEOs warned that a slowdown in data centre investment could pose economic and business risks.
1. Higher profit forecasts
Sumitomo Mitsui Financial Group raised its annual earnings forecast to 1.9 trillion yen from 1.7 trillion yen, citing strong local corporate lending demand and wider margins from higher domestic interest rates. Its net profit for July to September fell 10% year over year to 501.8 billion yen, following a 94 billion yen gain in the year-earlier period from selling its stake in Kotak Mahindra Bank.
2. Mizuho raises outlook
Mizuho Financial Group raised its annual profit forecast to 1.6 trillion yen from 1.4 trillion yen and doubled its share buyback programme for the financial year to 400 billion yen. Its July-to-September net profit rose 19% year over year to 473.6 billion yen.
3. Data centre concerns
Sumitomo Mitsui CEO Toru Nakashima said a slowdown in data centre investment could affect the Japanese and global economies and the bank's results over the next six months. He said the bank had tightened credit standards for data centre financing, including limiting lending to hyperscalers with high credit standing. Mizuho CEO Masahiro Kihara cited US restrictions on data centre construction as a tail risk that could slow projects and raise development costs.
