Japan megabanks shares see megagrowth despite slowing economy

Returns are double the regional average.

The shares of Japan's megabanks — Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. — have returned between 61% and 89% over the last five years, as of 20 November. This compares to 36% over the same period on the SNL Asia-Pacific Bank Index, a regional index based on SNL-covered banks in the region.

According to a report by SNL Financial, the slowing economic growth has also done little to hamper the business growth of the Japanese megabanks. As of 30 September, the aggregate loans of the three banks increased 17% to ¥241.33 trillion from fiscal 2010, while the aggregate deposits of the lenders rose 23% to ¥378.47 trillion over the same period.

SNL Financial adds that among the top 20 banks by total assets in Japan, Tokyo-based Shoko Chukin Bank Ltd. has the highest level of bad debt, with an NPL ratio of 4.87% as of March 31. In terms of capitalization, Shizuoka Bank Ltd. has the best tangible equity ratio at 7.73% as of Sept. 30, while Shinkin Central Bank has the lowest ratio at 3.92%.