(Adds detail, BOJ rate impact estimate)
By Makiko Yamazaki
TOKYO, Jan 30 (Reuters) - Japan's second-largest bank,
Sumitomo Mitsui Financial Group Inc , reported on Monday
a jump of 42.6% in third-quarter net profit, as a continuing
recovery in economic activities from the coronavirus pandemic
boosted the core lending business.
As the government steadily normalises social and economic
activity, the lender saw brisk loan demand from companies and
had a subdued level of loan-loss provisions.
A weak yen, driven by a widening gap between U.S. and
Japanese interest rates, also inflated profits earned abroad.
SMFG posted a profit of 240.6 billion yen ($1.3 billion) in
the October-December period versus 168.7 billion. That takes the
nine-month total to a record 766 billion yen, almost equivalent
to its full-year profit forecast of 770 billion.
But SMFG refrained from lifting its annual outlook, citing
recession fears in the United States and Europe, as well as
uncertainties over the war in Ukraine.
The forecast is short of the 794.8 billion yen average of 12
analyst estimates compiled by Refinitiv.
Shares of SMFG have jumped about 20% since the Bank of
Japan's surprise tweak to its bond yield control in late
December, a decision that sparked expectations that the central
bank could change its interest rate policy soon.
An exit from ultra-easy policy would widen the spread
between deposit and lending rates, a boost for Japanese banks'
core earnings after years of being squeezed by rock-bottom
rates.
SMFG forecasts a positive impact of 30 billion yen on net
interest income if the policy rate is lifted to zero from the
current negative 0.1%.
($1=129.4600 yen)
(Reporting by Makiko Yamazaki; Editing by Gerry Doyle and
Clarence Fernandez)
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