Japan's SMFG returns to profit, keeps outlook

TOKYO, July 30 (Reuters) - Japan's Sumitomo Mitsui Financial Group (8316.T) reported a return to profit on Thursday, buoyed by a rebound in its stock holdings and lower bad-loan costs, and stuck to its full-year forecast.

Japan's third-largest bank by assets said group net profit totalled 72.8 billion yen ($767 million) for April-June. The bank lost 373.5 billion yen in the year to March 31, its first such loss in six years.

The results compare with a net profit of 58.1 billion yen in the April-June period a year earlier.

Sumitomo Mitsui, which earlier this year bought Citigroup's (C.N) Japanese brokerage, stuck to its full-year forecast for a group net profit of 220 billion yen.

That compares with an average estimate of 190.3 billion yen in a poll of 14 analysts by Thomson Reuters.

Analysts believe the worst could be over for Japan's big banks, which have been helped by a stock market recovery and government stimulus to limit a surge in bankruptcies.

Japan's banks traditionally take stakes in their corporate clients to cement business ties, making them sensitive to stock-market swings. The benchmark Nikkei index .N225, which hit a near 26-year low in March, rose 23 percent in April-June.

Sumitomo Mitsui shares have risen about 6 percent this year, against a 2.8 percent drop in Japan's banking index .IBNKS.T. (Reporting by David Dolan; Editing by Dhara Ranasinghe)