TOKYO: Japanese banking giant Mitsubishi UFJ Financial Group said on Monday its April-June net profit dived by nearly one-third as negative interest rates and market turbulence dented its bottom line.
The drop mirrored similar falls at rivals Sumitomo Mitsui Financial Group and Mizuho Financial Group which reported their results last week.
Mitsubishi UFJ’s net profit tumbled 32 percent from a year ago to 188.9 billion yen ($1.84 billion) in the three months through June, its fiscal first quarter.
That was well below the average 225 billion yen average estimate of analysts surveyed by Bloomberg.
Japan’s biggest banks have been warning that negative rates are squeezing their lending margins since the unpopular policy was announced in January.
The country’s central bank surprised markets with the move, which was designed to boost lending to people and businesses and stoke growth in the wider economy.
Under the plan, commercial banks are effectively charged for keeping excess Reserves in the Bank of Japan’s vaults, giving them an incentive to lend more.
But it was widely criticized as a desperate bid to prop up Prime Minister Shinzo Abe’s faltering economic growth blitz, dubbed Abenomics.
Bankers were among the policy’s biggest critics, including Mitsubishi UFJ’s chief executive Nobuyuki Hirano, who warned it would hurt companies’ finances as they battle to drive up already sluggish lending.
Years of ultra-low interest rates have pressured profitability and pushed Japan’s lenders to seek new business overseas.