Are Japan's megabanks poised to awake from their post-restructuring slumber? The reporting season now under way hardly sets pulses racing.
Mizuho Financial Group and Sumitomo Mitsui Financial Group, Japan's second and third biggest banks, respectively, both saw net income shrink last year. Even if SMFG delivers on its forecast 22 per cent growth this year, profits will still be substantially below those achieved in fiscal 2005.
Yet there are some positive developments. Banks are finally starting to pass through last year's interest rate rises to borrowers; since depositors received a more modest increase, this means loan deposit spreads are widening.
Calculations by HSBC show the average spread expansion is pretty minimal, but should amount to a year-on-year gain of 10 basis points in the first quarter of this year, an increase of 6.5 per cent. In the absence of loan growth - which is sluggish at best - that should drive net interest income, which accounts for roughly half of total income for the top banks.