Japan’s major banks experienced a 32.7% year-on-year surge in net profits, reaching $37.25 billion (¥5.97 trillion) for the fiscal year ending March 2026, according to the Financial Services Agency (FSA). The profit boost was primarily driven by an expansion in domestic net interest income, which benefited from a combination of higher loan volumes and improved margins. Additionally, a rise in net fees and commissions, particularly from wealth management and loan-related operations, further supported earnings.
On the credit quality front, the total volume of non-performing loans (NPLs) ticked up slightly to $18.72 billion (¥3 trillion) as of March 31, 2026, compared to $18.1 billion (¥2.9 trillion) the year before. However, due to broader loan growth, the overall NPL ratio actually improved, dropping to 0.64% in fiscal year 2026 from 0.67% in the prior period.
Capital adequacy metrics showed minor declines across the sector. For the four internationally active financial institutions—Mizuho Financial Group, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Sumitomo Mitsui Trust Group—the average Common Equity Tier 1 (CET1) capital ratio slid to 12.51% from 13.19% the previous year. Similarly, the capital ratios for domestic-focused institutions, including Resona Holdings, SBI Shinsei Bank, and Aozora Bank, averaged 11.42%, down marginally from the 11.46% recorded a year earlier.
Click here for more on Banking
