MUFG, SMFG and Mizuho: FY2026 Results and FY2027 Q1 Analysis

This article compares and analyzes the FY2026 full-year results and FY2027 first-quarter results of Mitsubishi UFJ Financial Group (8306), Sumitomo Mitsui Financial Group (8316), and Mizuho Financial Group (8411), using only the companies’ earnings releases (XBRL) published through TDnet. Stock-price metrics, market data, and segment-level revenue are not included in the source data and are therefore excluded from this analysis.

1. Introduction: An Industry Where Ordinary Income More Than Doubled in Four Years

For FY2026, the three banks combined reported Ordinary Revenue of ¥34.50 trillion, Ordinary Income of ¥7.29 trillion, and net income attributable to owners of the parent of ¥5.26 trillion. Ordinary Income was 2.3 times the FY2022 level of ¥3.14 trillion. Combined total assets reached approximately ¥1,062 trillion.

The key point, however, is not simply “revenue growth.” FY2026 Ordinary Revenue growth remained in the single digits—+0.6% for Mizuho, +6.1% for SMFG, and +7.3% for MUFG—while Ordinary Income increased sharply by +34.6%, +34.0%, and +27.7%, respectively. The phase of top-line expansion, in which both interest income and interest expense expanded simultaneously as rates rose, has passed its peak. FY2026 marked the point at which genuine improvement in spreads began to flow through to earnings.

2. Industry-Wide Trends (Three Banks Combined; ¥ billion)

Note: FY2025 combined Loans and Deposits cannot be calculated because SMFG’s figures are missing from the source data.

Ordinary Revenue increased 2.4 times from FY2022 to FY2026, but growth slowed to +5.1% from FY2025 to FY2026. Net income, by contrast, rose +34.0% over the same period. Loans increased +10.9% from FY2024 to FY2026, while Deposits rose +7.7%, indicating that asset-side growth exceeded liability-side growth. The combined Loan-to-Deposit Ratio increased from 56.9% in FY2022 to 59.4% in FY2026, confirming that excess deposits were increasingly being deployed into loans.

3. Ordinary Income Trends: Mizuho Leads on Growth, MUFG Dominates in Absolute Scale

Figures in the table are ¥ billion.

Mizuho’s Ordinary Income CAGR of +29.5% was the highest among the three banks, but this also reflects its low starting point in FY2022, when its Ordinary Income margin was 14.1%. Even in FY2026, its 17.3% Ordinary Income margin lagged MUFG’s 23.3% by 6.0 percentage points. On an approximate ROE basis, however, Mizuho led at 10.9%, followed by MUFG at 10.2% and SMFG at 9.9%. Because approximate ROE is calculated as net income divided by net assets, and the ratio of net assets to total assets differed materially—3.7% for Mizuho, 4.8% for SMFG, and 5.2% for MUFG—Mizuho’s high ROE should reasonably be interpreted as being supported in part by its smaller equity denominator and higher leverage.

MUFG’s Ordinary Income fell to ¥1.02 trillion in FY2023, down 33.6% from FY2022, before recovering sharply from FY2024 onward. The source data do not allow the specific causes of this temporary decline to be identified.

4. Earnings Structure: Mizuho’s Trading Exposure and SMFG’s Net Interest Income Dependence

FY2026 core revenue items and their composition (¥ billion):

Note: Trading Income is reported on a gross basis, and Trading Expense is not included in the source data. It therefore cannot be converted to a net figure. Mizuho’s trading ratio may consequently contain an upward bias.

The differences in business profile are clear. SMFG has the strongest dependence on lending and deposit spreads, with a Net Interest Income Ratio of 56.8%. MUFG has a more balanced mix, with Net Interest Income and fees in an almost 5:4 ratio; its Trust Fees of ¥163.1 billion are also the highest among the three banks, 2.4 times Mizuho’s. Mizuho’s Trading Income of ¥898.8 billion exceeded the combined total of the other two banks, highlighting the importance of market-related revenue. However, Mizuho’s Trading Income has declined for two consecutive years from ¥1,090.3 billion in FY2024, falling 14.2% to ¥898.8 billion in FY2026. This decline was offset by growth in Fees & Commissions Income from ¥1,115.4 billion to ¥1,311.9 billion, or +17.6%.

The four-year CAGR for Net Fees & Commissions Income was +9.9% for Mizuho, +11.0% for SMFG, and +11.7% for MUFG. The fact that non-interest income, which is less sensitive to interest-rate factors, has accumulated at approximately 10% annually across all three banks is an important structural development for the industry.

5. Spread Analysis: Yield Comparison Based on Period-End Balances

FY2026 (interest figures in ¥ billion; yields in %):

Note: Because average balances during the period were not available, these are approximate calculations based on period-end balances and do not equal precisely calculated funding spreads.

SMFG had the widest spread at 2.48 points, 0.70 points wider than Mizuho’s 1.78 points. SMFG’s Net Interest Income relative to total assets was also 0.83%, approximately 1.8 times Mizuho’s 0.46%. Mizuho’s Cash & Due from Banks amounted to ¥61,567.7 billion, or 20.4% of total assets of approximately ¥302.2 trillion, suggesting that its relatively high proportion of lower-yielding assets may be suppressing overall yields.

The trend in Net Interest Income is also contrasting. Mizuho’s Net Interest Income fell to ¥887.6 billion in FY2024 before recovering to ¥1,377.0 billion in FY2026, up 31.7% year on year. Notably, this increase occurred even though Interest Income declined from ¥6,000.2 billion to ¥5,851.5 billion, because Interest Expense contracted by ¥480.4 billion, from ¥4,954.9 billion to ¥4,474.5 billion. At MUFG, Interest Income rose +3.0% and Interest Expense +2.3%, producing only a modest +4.5% increase in Net Interest Income from ¥2,876.4 billion to ¥3,006.0 billion. SMFG recorded the strongest growth, increasing from ¥1,880.6 billion in FY2024 to ¥2,719.6 billion in FY2026, or +44.6% in two years.

6. Efficiency: The Gap Between Reported OHR and Core-Gross-Profit OHR

The reported OHR (General & Administrative Expenses ÷ Ordinary Revenue) improved substantially for all three banks from FY2022 to FY2026. This does not necessarily indicate better cost efficiency, however, because the denominator—Ordinary Revenue—was inflated by gross interest income. We therefore recalculated OHR using core gross profit as the denominator.

The picture is completely reversed. On a reported OHR basis, Mizuho was the best performer in FY2026 at 23.2%. On a core OHR basis, however, Mizuho deteriorated for four consecutive years to 61.4%, the weakest of the three, while SMFG was best at 55.4%. Mizuho’s General & Administrative Expenses rose from ¥1,392.8 billion in FY2022 to ¥2,103.4 billion in FY2026, an increase of 51.0% and a four-year CAGR of 10.9%. This significantly exceeded the 21.7% increase in core gross profit, equivalent to a 5.0% CAGR. SMFG increased expenses by 45.6% while expanding core gross profit by 68.9%; MUFG increased expenses by 27.0% while expanding core gross profit by 51.4%. The key distinction between Mizuho and the other two banks is whether revenue growth can continue to outpace cost growth.

7. Balance-Sheet Analysis: Loan-to-Deposit Ratios, Unrealized Gains and Credit Buffers

FY2026 year-end (¥ billion; ratios in %):

Loans increased by close to double digits across all three banks: +6.0% for Mizuho and +10.2% for MUFG from FY2025 to FY2026, while SMFG increased +9.9% from FY2024. SMFG had the highest Loan-to-Deposit Ratio at 63.4%, while MUFG had the lowest at 55.9%. MUFG held a substantial ¥85,714.7 billion in Securities, equivalent to 19.9% of total assets, as well as ¥90,045.5 billion in Cash & Due from Banks.

Unrealized Gains/Losses on Securities and Deferred Gains/Losses on Hedges should be viewed together. Mizuho’s Unrealized Gains/Losses on Securities increased by ¥446.8 billion from ¥867.6 billion in FY2025 to ¥1,314.4 billion in FY2026, but Deferred Gains/Losses on Hedges deteriorated by ¥390.0 billion, from -¥465.2 billion to -¥855.2 billion. The combined net amount was therefore broadly flat, rising from ¥402.4 billion to ¥459.2 billion. MUFG also had the largest negative Deferred Gains/Losses on Hedges at -¥1,262.8 billion, but its Foreign Currency Translation Adjustment of ¥3,711.5 billion more than offset the negative figure. The net total of the three items was ¥4,120.7 billion for MUFG and ¥3,591.2 billion for SMFG, compared with only ¥1,090.0 billion for Mizuho, indicating a substantial gap in accumulated other comprehensive income.

In terms of credit buffers, Mizuho’s Allowance for Loan Losses declined for the second consecutive year, from ¥787.8 billion in FY2024 to ¥637.3 billion in FY2026, equivalent to 0.64% of Loans. SMFG, by contrast, increased its allowance from ¥817.5 billion in FY2024 to ¥1,007.4 billion, or +23.2%. A credit-cost ratio cannot be calculated because risk assets are unavailable, but the divergent direction of allowance levels may indicate differences in credit-portfolio management.

8. Cash Flow and Shareholder Returns

All three banks reported substantially negative operating cash flow in FY2026. Operating cash flow at banks fluctuates with changes in deposits, loans, and trading assets, so this does not necessarily indicate deteriorating business profitability. Loans increased at all three banks, and the expansion of lending assets was likely a major factor behind the negative operating cash flow. At MUFG, Cash & Due from Banks declined by ¥19,049.9 billion, from ¥109,095.4 billion to ¥90,045.5 billion, suggesting that liquidity was increasingly shifted into investment assets.

Shareholder returns (¥ billion) were as follows. Because cash dividends paid were missing from the source data, the Total Shareholder Returns (cash) shown below represent share repurchases only.

MUFG continued to repurchase more than ¥400.0 billion of its own shares for the fourth consecutive year. Mizuho’s buybacks became more substantial from FY2025, reaching ¥404.3 billion in FY2026—approximately 3.9 times the prior year and above SMFG’s ¥250.6 billion. The increase in negative financing cash flow from -¥299.0 billion to -¥523.1 billion appears to primarily reflect increased share repurchases.

9. Per-Share Metrics and Dividend Policies

SMFG appears to have conducted an approximately one-for-three stock split in FY2025, based on changes in shares outstanding. Per-share figures before FY2025 were on a pre-split basis and cannot be compared directly. The table below therefore also presents SMFG’s FY2022–FY2024 figures adjusted to one-third of the reported values.

The notable point is that the three banks’ EPS CAGRs were broadly aligned in the +24% range. SMFG’s DPS appears to have declined from ¥270 in FY2024 to ¥157 in FY2026, but on a split-adjusted basis it increased from ¥90 to ¥157, representing a 74.4% increase.

Payout ratios moved in opposite directions. MUFG’s payout ratio increased from 31.7% to 40.3%, while Mizuho’s declined from 40.0% in FY2025 to 28.8% in FY2026. Mizuho’s DPS rose only 3.6%, from ¥140 to ¥145, despite EPS growth of 43.6%. Combined with the substantial increase in share repurchases to ¥404.3 billion, this may indicate a shift in Mizuho’s shareholder-return mix from dividends toward buybacks. Because actual cash dividends paid are not included in the source data, a precise comparison of Total Shareholder Returns (cash) payout ratios is not possible.

10. Earnings Forecasts and First-Quarter Progress

Mizuho’s forecast progress was 32.5% and SMFG’s 29.5%, both ahead of the 25% implied by a straight-line quarterly run rate. MUFG’s full-year forecast was not included in the source data, but its Q1 net income of ¥809.4 billion was equivalent to 33.3% of the prior-year actual.

Annualizing Q1 Net Interest Income on a simple four-times basis produces ¥1,456.8 billion for Mizuho, +5.8% versus FY2026; ¥3,167.6 billion for SMFG, +16.5%; and ¥3,529.2 billion for MUFG, +17.4%. This is a rough calculation that ignores quarterly seasonality, but it suggests that the expansion phase in Net Interest Income may be continuing. Four-times annualized Net Fees & Commissions Income would be ¥1,065.6 billion for Mizuho and ¥2,232.8 billion for MUFG, both broadly flat versus FY2026. SMFG alone would reach ¥1,895.2 billion, up 4.1%.

Mizuho’s Q1 core OHR improved substantially to 50.0%, but this was heavily influenced by the concentrated recognition of ¥364.1 billion in Trading Income during Q1. Annualized at four times, that would equal ¥1,456.4 billion, far above FY2026 full-year Trading Income of ¥898.8 billion. Sustainability over the full year therefore requires cautious assessment.

11. Key Issues to Monitor

First is Mizuho’s cost structure. The deterioration of core OHR for four consecutive years to 61.4% likely reflects increases in personnel costs, systems investment, and strategic investment, although the source data do not identify the breakdown. If General & Administrative Expenses continue to grow at a 10.9% CAGR while core gross profit grows at only 5.0%, revenue growth may increasingly be absorbed by expenses.

Second is the significance of SMFG’s larger credit buffer. While Allowance for Loan Losses increased 23.2% over two years, its Loan-to-Deposit Ratio was the highest of the three banks at 63.4%. This suggests an operating approach that seeks to pursue growth while maintaining balance-sheet soundness. The source data do not indicate whether the additional allowance was driven by specific exposures or was precautionary.

Third is the increase in Deferred Gains/Losses on Hedges. The combined Deferred Gains/Losses on Hedges for the three banks expanded to -¥2,418.7 billion in FY2026. This may reflect the valuation of hedge positions amid rising rates, although interest-rate levels themselves are outside the scope of this article. How this item offsets Unrealized Gains/Losses on Securities in the future could be important in assessing the quality of capital.

Fourth is the choice of shareholder-return tools. Mizuho’s payout ratio declined to 28.8% while share repurchases increased to ¥404.3 billion, suggesting a possible policy shift toward capital-efficiency-oriented buybacks. MUFG is pursuing both a 40.3% payout ratio and ¥500.2 billion in buybacks, and its substantial net assets of ¥23,744.1 billion may provide greater flexibility in selecting its return mix.

12. Conclusion