Mitsubishi UFJ (MUFG) to Post Q1 Earnings: What’s in Store?

Mitsubishi UFJ Financial Group MUFG is scheduled to report first-quarter fiscal 2018 (ended Jun 30, 2018) results on Aug 2.

This Japan-based banking giant reported profits attributable to owners of parent of ¥989.6 billion ($8.9 billion) for fiscal 2017, up 6.8% year over year. Results reflected low credit costs and strong capital as positives. Nevertheless, elevated general & administrative expenses, decreased gross profits and decline in net interest income acted as headwinds.

Notably, Mitsubishi UFJ has lost 19.4% on the NYSE over the past six months compared with the 12.7% decline of the industry it belongs to.

Factors to Impact Q1 Results

Net Interest Income Under Pressure: Profitability of Mitsubishi UFJ is likely to reflect unfavorable impact of sluggish economic growth in Japan and persistent negative interest rate environment that was adopted by the Bank of Japan in early 2016. Though the central bank aims to boost growth and inflation through a negative interest rate policy, this will likely weigh on Mitsubishi UFJ’s net interest income.

Expenses Might Rise: Bottom-line performance might display impact of continued rise in expenses, driven by digital investment and branch network restructuring in Japan and abroad.

Investment Banking Fees Likely to Rise: Equity issuances across the globe seem to have gotten a boost from IPOs and follow-on offerings. Therefore, Mitsubishi UFJ is expected to have recorded a slight increase in equity underwriting fees in the quarter under review. Also, increasing global M&A activities will likely support the company’s advisory fees to some extent, moving ahead.

Financial Targets: Notably, Mitsubishi UFJ targets to deliver ¥850 billion of consolidated net income for the fiscal ended Mar 31, 2019, indicating a decrease of 14.1% year over year.

Mitsubishi UFJ currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Schedule of Other Foreign Stocks

Among other foreign banks, Royal Bank of Canada RY is scheduled to release results on Aug 22, while Canadian Imperial Bank of Commerce CM and The Bank of Nova Scotia BNS are set to report their quarterly figures on Aug 23 and Aug 28, respectively.

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