Mitsubishi UFJ Raises Profit Target After First-Half Beat

The Japanese bank now expects net profit to rise 15% in the fiscal year ending in March, up from its previous forecast of 2.7 trillion yen. It also plans to repurchase up to 200 billion yen of its shares by the end of January.

Net profit for the six months ended September rose 26% from a year earlier to 1.631 trillion yen, or $10.20 billion, topping the 1.544 trillion yen estimate in a Visible Alpha poll of analysts. Gains from Mitsubishi UFJ’s stake in Morgan Stanley also supported results, while cybersecurity-related expenses increased, the company said.

Net interest income climbed 29% to 1.851 trillion yen as domestic rates rose and lending expanded. Net fees and commissions gained 14% to 1.138 trillion yen, partly reflecting strong performance in asset management. The bank recorded net losses of 196.10 billion yen on debt securities, partly from sales of U.S. mortgage-backed securities, compared with gains of 2.99 billion yen a year earlier. First-half credit costs were 70.95 billion yen, down from 76.39 billion yen.

Japan’s return to sustained inflation and higher interest rates has bolstered large banks’ earnings. The Bank of Japan raised its policy rate in September to 1.25%, the highest level since 1995, and last month declared victory in its decadeslong fight against deflation. The 10-year Japanese government bond yield reached 3.115% in September, its highest since August 1996. Higher yields can enable banks to charge more on commercial loans and earn more on bonds and other investments. Mitsubishi UFJ shares have risen 39% this year amid expectations of BOJ rate increases and wider lending spreads. In September, the bank said it would explore a potential collaboration with BlackRock to give Japanese and foreign institutional investors access to domestic private credit opportunities.