Mitsubishi UFJ (MTU) To Post Q4 Earnings: What's In Store?

Mitsubishi UFJ Financial Group, Inc. (NYSE:MTU) is scheduled to report fourth-quarter and fiscal 2017 (ended Mar 31) results on May 15.

The Japanese banking giant – Mitsubishi UFJ – had reported profits attributable to owners of parent of ¥786.9 billion ($7.4 billion) for the nine-month period (ended Dec 31) of fiscal year ended Mar 31, 2017, down 7.7% year over year. Results were affected by decreased gross profits and fall in net interest income. However, fall in general and administrative expenses, and low credit costs acted as tailwinds.

Despite this dismal performance, Mitsubishi UFJ’s shares gained around 3% on the NYSE for the three-month period ended Mar 31, 2017.

Will Mitsubishi UFJ disappoint again in the upcoming release? Let's see what factors might have influenced the earnings report this time around.

Factors to Impact Q4 Results

Profitability of Mitsubishi UFJ is likely to be hit by sluggish growth in the Japanese economy and persistent negative interest rate environment that was adopted by the Bank of Japan in early 2016. While central banks of most countries aim to boost growth and inflation through negative interest rates policy, this takes a toll on the banks’ net interest income. The company is not untouched from this impact.

Notably, in the last quarter, Mitsubishi UFJ reaffirmed its target of ¥850 billion of consolidated net income for the fiscal year ending Mar 31, 2017, displaying a decline of 11% year over year.

Quarterly results are also likely to be affected by the continued appreciation of the Japanese Yen against other currencies. Appreciation of domestic currency is likely to have adversely affected Mitsubishi UFJ’s overseas loans and deposits balances in the to-be-reported quarter.

Further, bottom-line growth might be hurt by continued rise in expenses, driven by regulatory costs in overseas businesses.

However, on a positive note, quarterly results might get a lift from the fee income base. Also, overall revenues are likely to benefit from the company’s prior acquisitions.

Currently, Mitsubishi UFJ currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Shinhan Financial Group Co Ltd (NYSE:SHG) has been witnessing upward estimate revisions for the last 60 days. Further, the stock climbed over 15% over the past six months. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Grupo Financiero Galicia S.A. (NASDAQ:GGAL) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 55.3% over the last six months. It currently sports a Zacks Rank #1.

UBS Group AG (NYSE:UBS) has been witnessing upward estimate revisions for the last 30 days. Over the last six months, the company’s share price has been up more than 2%. It also boasts a Zacks Rank #1.

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