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

Mitsubishi UFJ Financial Group (NYSE:MUFG) is scheduled to report fourth-quarter fiscal 2018 (ended Mar 31, 2018) results on May 15.

The banking giant of Japan reported profits attributable to owners of parent of ¥863.4 billion ($7.7 billion) for the first nine months of fiscal 2018, up 9.7% year over year. Results reflected increased gross profits and low credit costs. Yet, elevated general & administrative expenses and a decline in net interest income acted as headwinds.

Yet, Mitsubishi UFJ has gained 1.2% on the NYSE over the past six months, underperforming the 1.6% rally of the industry it belongs to.

Factors to Impact Q4 Results

Net Interest Income Under Pressure: Profitability of Mitsubishi UFJ is likely to be hit by 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 growth might be hurt by continued rise in expenses, driven by digital investment and branch network restructuring in Japan and abroad.

Investment Banking Fees Likely to Rise: Global investment banking fees disappointed on a year-over-year basis in the first three months of 2018. However, strong equity issuances globally are expected to have boosted IPOs and follow-on offerings. Thus, the company might have recorded higher fee income.

Reaffirmation of Net Income Target: Notably, Mitsubishi UFJ targets to deliver ¥950 billion of consolidated net income for the fiscal year ended Mar 31, 2018, indicating an increase of 2.5% year over year.

Mitsubishi UFJ currently carries a Zacks Rank #2 (Buy). 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 (NYSE:RY) is scheduled to report results on May 24 while Canadian Imperial Bank of Commerce (TO:CM) and The Bank of Nova Scotia (TO:BNS) are expected to report on May 23 and May 29, respectively.

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