January 30, 2020 / 8:09 AM / 19 days ago

UPDATE 1-Japan's SMFG Q3 net profit rises 8.3%, maintains outlook

* Keeps full-year net profit forecast at Y700 bln

* Net interest income fell 6.3% year on year (Adds details on results, background)

TOKYO, Jan 30 (Reuters) - Sumitomo Mitsui Financial Group Inc (SMFG), Japan’s second largest lender by assets, reported an 8.3% rise in third-quarter profit on Thursday, driven by strong performance of its bond trading business.

SMFG posted a profit of 178.9 billion yen ($1.63 billion) for the three months through December, compared with 165.2 billion yen in the same period a year earlier, according to Reuters’ calculations based on nine-month cumulative figures disclosed by the bank in a stock exchange filing.

SMFG reiterated its profit view of 700 billion yen for the full-year through March. That compared with the 720.3 billion yen average of 10 analyst estimates compiled by Refinitiv.

The lender’s trading division posted a net business profit of 329.6 billion yen in the nine months through December, up 26.6% from a year earlier, mainly supported by sales of foreign bonds.

SMFG is the first to report earnings among major Japanese lenders, which continue to struggle with weak returns on loans in part due to the central bank’s ultra-loose monetary policy aimed at reducing the cost of loans to stimulate the economy.

At its core bank unit, the domestic loan-to-deposit spread - the difference between interest earned on loans and interest paid on deposits - fell to 0.90% from 0.93% a year earlier.

The lender’s net interest income at the banking arm came in at 652.2 billion yen for the nine months through December, a 6.3% decline year on year.

SMFG has long been the leanest among Japan’s three megabanks in terms of expenses as a portion of revenue. It said its expense ratio was 62.7% in the nine months, up 3.1 percentage points from a year earlier.

Rivals Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc are scheduled to announce third-quarter earnings on Friday and Tuesday, respectively. ($1 = 109.7000 yen) (Reporting by Takashi Umekawa; Editing by Muralikumar Anantharaman, Shri Navaratnam and Aditya Soni)

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