* MUFG forecast 2.5 pct rise in net profit for this
* Mizuho forecast 8.8 pct fall, SMFG 10.8 pct decline
* Unutilised deposit money grow sharply amid weak loan
(Recasts with top three banks' results)
By Taiga Uranaka
TOKYO, May 15 Japan's top banks flagged a
cautious outlook and reported a jump in unutilised deposits, as
they are hobbled by negative interest rates and tepid demand for
cash from businesses amid weak economic growth.
The results on Monday from Mitsubishi UFJ Financial Group
(MUFG), Mizuho Financial Group and Sumitomo
Mitsui Financial Group, the nation's top three banks by
assets, underscore challenges the Bank of Japan (BOJ) faces in
its attempt to spur borrowing and spending when companies are
sitting on record levels of cash.
MUFG, Japan's biggest lender, reported a 2.6 percent fall
in profit for the year ended in March, due to weak loan business
and gave a cautious outlook for the current financial year.
"A declining trend in domestic lending income continues and
we have to brace for tough business conditions ahead," MUFG CEO
Nobuyuki Hirano told a news conference.
The country's No 2. lender Mizuho and SMFG, the No. 3, said
they expected net profits to fall for the current financial
Japanese banks have yet to see the strong growth in loan
demand expected after the BOJ launched massive stimulus measures
in April 2013, hoping to lift the country out of years of
deflation by flooding the economy with cheap money.
Instead, lenders have seen a surge in deposits from
businesses and households. The trend has not changed even since
the BOJ introduced a negative interest rate policy last year to
further drive down borrowing costs.
"From the viewpoint of corporate customers, a fall in
interest rates would not necessarily lead to capital
investments," SMFG's CEO Takeshi Kunibe told a news conference.
The three banks' combined "cash and due from banks", which
represents unutilised money on their balance sheets and is
mostly made up of customer deposits, grew 23 percent to 158
trillion yen ($1.4 trillion) in the year that ended on March 31.
They have now surged 4.6 times since March 2013, immediately
before the BOJ launched its bond-buying programme.
"More money is flowing in than we can put to use," Mizuho
CEO Yasuhiro Sato told a news conference when asked about the
sharp growth in deposits.
Outstanding loans at the three banks grew 19 percent between
March 2013 and March 2017, but deposits jumped 34 percent during
Analysts said banks' unutilised deposits are unlikely to
disappear as loan demand from businesses and households is
expected to remain tepid.
"Private sector, especially businesses, has ample surplus
funds," said S&P Global Ratings Japan analyst Ryoji Yoshizawa.
($1 = 113.4600 yen)
(Reporting by Taiga Uranaka; Editing by Muralikumar
Anantharaman and Susan Fenton)