The Japan megabanks earnings forecast just moved higher, but the upgrades come with a warning. Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group both flagged the prospect of slower investment in AI data centres. Their outlook changes matter for any investor tracking bank earnings tied to tech spending.
How Much Did Japan’s Megabanks Raise Their Earnings Forecasts?
- SMFG raised its annual earnings forecast to 1.9 trillion yen from 1.7 trillion yen.
- Mizuho lifted its annual profit forecast to 1.6 trillion yen from 1.4 trillion yen.
SMFG credited strong corporate lending demand from local firms. Higher domestic interest rates also widened its lending margins.
What Did the July to September Quarter Show?
SMFG posted net profit of 501.8 billion yen (US$3.14 billion) for the July to September quarter, down 10% from a year earlier. The comparison base was inflated by a gain of 94 billion yen from selling its stake in India’s Kotak Mahindra Bank.
Mizuho went the other way. Its net profit reached 473.6 billion yen (US$2.96 billion) for the same quarter, up 19% year on year.
Why Are SMFG and Mizuho Warning About AI Data Centres?
SMFG CEO Toru Nakashima said a slowdown in data centre investment could hit the Japanese and global economies. He added that it could also affect SMFG’s results over the next six months.
“This year we have adopted stricter standards on extending credit for data centre financing, for instance restricting ourselves to just hyperscalers with high credit standing,” Nakashima said. Investors comparing AI themes can read more in our AI Stock Analysis for Malaysians guide.
Mizuho CEO Masahiro Kihara named greater restrictions on data centre construction in the US as a tail risk. Sweeping Democratic Party wins in last week’s midterm elections could slow projects and raise development costs.
Fears of overheating in global data centre investment and rising political opposition have sent technology stocks sharply lower in recent weeks. Nvidia’s chief executive Jensen Huang resigned over extramarital affairs, raising concern over the chipmaker’s ability to lead data centre projects. Nvidia both supplies chips and finances the infrastructure built around them.
Nakashima said the impact of Huang stepping down is difficult to see at present. He said the outcome will depend on the new management. “Personally, I don’t think their stance will change that significantly,” he added.
- SMFG increased its share buyback programme by 220 billion yen, bringing the total to 400 billion yen for the financial year ending March 2027.
- Mizuho doubled its buyback programme for this financial year to 400 billion yen.
Buybacks return cash to shareholders and reduce the number of shares in issue. Both banks are using them while lending remains strong. Investors may want to watch whether the data centre risks flagged by both CEOs show up in future lending and profit figures.
Disclaimer: This article is for information only and does not constitute investment advice. Always do your own research before making any investment decision.
Key Takeaways
- SMFG raised its annual earnings forecast to 1.9 trillion yen from 1.7 trillion yen.
- Mizuho raised its annual profit forecast to 1.6 trillion yen from 1.4 trillion yen.
- SMFG’s July to September net profit fell 10%, while Mizuho’s rose 19%.
- Both banks flagged a possible slowdown in AI data centre investment as a risk.
- Both banks have set buyback programmes at 400 billion yen.
Frequently Asked Questions
What is SMFG’s new annual earnings forecast?
SMFG raised its annual earnings forecast to 1.9 trillion yen from 1.7 trillion yen. The bank also expanded its share buyback programme.
How much did Mizuho raise its annual profit forecast?
Mizuho raised its annual profit forecast to 1.6 trillion yen from 1.4 trillion yen. It also doubled its share buyback programme to 400 billion yen for this financial year.
Why are Japan’s megabanks warning about data centres?
SMFG CEO Toru Nakashima said a slowdown in data centre investment could affect the bank’s results over the next six months. Mizuho CEO Masahiro Kihara flagged US restrictions on data centre construction as a tail risk.
How big is SMFG’s share buyback for the year ending March 2027?
SMFG increased its share buyback by 220 billion yen, bringing the total to 400 billion yen for the financial year ending March 2027.
Source: View Original Article — The content is based on the original publisher. Refer to the original content for accurate info. Contact us for any changes.
Related Articles & Resources
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
Want to invest in Bursa Malaysia or US markets? Contact Dexter Chia, an AI Driven Remisier who has 2,300+ clients at Malacca Securities Sdn Bhd (M+ Global). M+ Global Invitation Code: UBZQ | WhatsApp: +60169059789 | Why Choose Dexter?
