January 30, 2013 / 8:15 AM / 5 years ago

UPDATE 1-SMFG keeps FY earnings forecast intact on economic outlook

* Nine-month profit 550.4 bln yen vs full-year forecast 540 bln yen

* Q3 profit 219.4 bln yen vs 97.2 bln yen year ago

* Japan’s third-biggest lender says economic outlook uncertain (Adds quarterly earnings, outlook for Japan’s economic outlook)

TOKYO, Jan 30 (Reuters) - Sumitomo Mitsui Financial Group Inc (SMFG) kept its full-year profit forecast unchanged even after Japan’s No.3 lender by assets posted nine-month earnings that had already beaten the estimate, underscoring the bank’s cautious economic outlook.

SMFG, whose net profit more than doubled in the third quarter from a year earlier, said on Wednesday that it is keeping its full-year net income forecast at 540 billion yen ($5.96 billion), even after nine-month earnings rose to 550.4 billion yen.

Japanese banks are typically conservative in their forecasts, often holding off on upward revisions until near the end of the fiscal year, to reflect loan-loss provisions and stock market swings. SMFG may report a net profit of 572.6 billion yen, according to the average estimate in a poll of 16 analysts by Thomson Reuters.

For the third quarter ended in December, SMFG’s net profit rose to 219.4 billion yen from 97.2 billion yen a year earlier, Reuters calculations based on the nine-month results show.

Earnings surged after SMFG’s consumer finance unit, which extends unsecured loans to retail clients, grew more profitable and a year-end rally in Japanese stocks narrowed hefty losses on the bank’s massive equity portfolio booked earlier in the year.

Strong growth in overseas loans also helped partly offset continued weakness in domestic lending.

Shares of SMFG gained 28 percent in the final three months of 2012, outperforming a 17 percent rise in the benchmark Nikkei average.

Japan is expected to pull out of a recession in the January-March quarter, but growth will likely be shallow and fragile, economists say.

Many of them warn that the government’s stimulus could give the sluggish economy only a temporary jolt if Japan fails to follow through with politically difficult economic reforms such as deregulation of its protected farming sector.

SMFG is the first among Japan’s top three lenders to report financial results for the period. Mizuho Financial Group Inc will announce its earnings on Thursday and Mitsubishi UFJ Financial Group on Friday. ($1 = 90.6500 Japanese yen) (Reporting by Taiga Uranaka; Editing by Ryan Woo)

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