Sumitomo Mitsui Financial Group Forecast

By Anton Bridge and Miho Uranaka

TOKYO (Reuters) – Sumitomo Mitsui Financial Group (NYSE:SMFG)'s CEO stated that the company may achieve a net profit of over 1.2 trillion yen ($7.65 billion) in the year starting next April. This potential increase is attributed to a recovering Japanese banking sector that is capitalizing on efforts to diversify income sources internationally, coupled with the normalizing interest rates.

The forecast surpasses the previous target of 1.16 trillion yen for the current year, fueled by higher interest rates in Japan and significant offloading of cross-shareholdings that have positively impacted current results.

SMFG Chief Executive Officer Toru Nakashima expressed confidence in exceeding the 1.2 trillion yen forecast if the current strategies continue. The firm reported a profit of 196 billion yen from equity holdings sales in its second-quarter earnings, mainly linked to the disposal of cross-shareholdings.

Nakashima cautioned against relying solely on these sales for future profits, emphasizing that they will diminish in five years. He observed gross profit growth across all business sectors and anticipates this will persist as major Japanese corporations expand internationally and engage in mergers, acquisitions, and capital investments. He remarked, “Domestic business opportunities are really increasing.”

Furthermore, the SMFG online banking app, Olive, has outperformed expectations and is likely to become profitable sooner than anticipated in the current financial year.

Nakashima stressed the need for the group to explore new opportunities as it approaches the next mid-term plan period, beginning in April 2025, to avoid profit decline when cross-shareholding sales end. He concluded, “It’s not enough. I want to achieve continuous profit growth.”

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