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Tokyo - Japan's top three banks have posted big gains in first-half profit and say strong earnings are set to continue as their brokerage businesses cash in on a surging stock market.
The country's biggest lender Mitsubishi UFJ Financial Group said Thursday that net profit in the six months to September jumped 82.5% to ¥530.2bn ($5.3bn).
Mitsubishi's results, mirrored by smaller rivals Mizuho Financial Group and Sumitomo Mitsui Financial Group, come as their stock trading businesses benefited from a surge in the Japanese stock market.
Overseas investors have poured billions of dollars into the long-forgotten market this year as a government economy blitz helped pushed down the value of the yen, giving a boost to exporters' bottom line.
Tokyo's Nikkei 225 stock index surged to a five-year high in May. It has slipped from its perch since then but is still up nearly 40% since January as the world's third largest economy benefits from Prime Minister Shinzo Abe's growth plan, dubbed Abenomics.
On Thursday, Mitsubishi UFJ boosted its net profit forecast for the year to March 2014, projecting a net profit of ¥910bn, compared with its earlier estimate of ¥760bn.
The bank said it benefited both from brisk business at its brokerage unit and an uptick in the value of its own shareholdings in other Japanese firms.
It added that its mainline banking business was also booking healthy gains while it cut its bad loans, offsetting a slump in its bond-trading business, a key profit driver in recent years.
Japanese lenders are now cutting back on their reliance on domestic government bonds as the Bank of Japan's huge bond-buying measures announced in April start to reshape the country's debt markets.
The BOJ's programme unsettled the domestic debt market, prompting Japanese banks to further trim their bond exposure.
Despite the measures to stoke Japan's economy, domestic borrowing has remained weak with few signs that firms are ready to take out more loans and invest heavily.
Earlier Thursday, Mizuho said its net profit more than doubled to ¥429.7bn as it boosted its full-year net earnings forecast to ¥600bn from ¥500bn.
"Japan's mega banks in general benefited the strong recovery in the stock market," said Yoshihiro Okumura, general manager for research at Chibagin Asset Management.
"The banks are also expected to perform well in the second half although Japanese shares are cooling off."
Mizuho has been under fire since it emerged last month that it processed hundreds of loans worth about $2m for the country's notorious yakuza crime syndicates, which are involved in activities ranging from prostitution and drugs to extortion and white-collar crime.
The revelations have sparked a wider investigation of Japan's banking industry but there are few immediate signs that the scandal has damaged the banks' business.
"The scandal is unlikely to visibly affect Mizuho's earnings in the short term, but investors may see it as a big risk factor," Okumura said.
Mizuho's results were published after Tokyo markets closed.
On Tuesday, Sumitomo Mitsui said it saw a strong half-year result with net profit up 52.8% to ¥505.7bn, also largely due to the Nikkei's rally.
It said full-year net profit would come in at ¥750bn, well up from an earlier ¥580bn forecast.
