Sumitomo Mitsui Raises Dividend as Profit Surges to Record

Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, said profit surged 52 percent to a record and raised its annual dividend as the value of its stock holdings climbed and bad-loan costs fell.

Net income rose to 790 billion yen ($8 billion) in the year ended March 31 from 518.5 billion yen a year earlier, the Tokyo-based lender said in a preliminary earnings statement today. It increased its annual dividend 20 percent to 120 yen.

Prime Minister Shinzo Abe’s efforts to end more than a decade of deflation fueled a 35 percent increase in the benchmark Topix Index this year. Lenders’ revenue may grow if the Bank of Japan’s monetary easing succeeds in reviving the economy, boosting lending, Standard & Poor’s said this week.

Credit costs at lending unit Sumitomo Mitsui Banking Corp. were 60 billion yen lower compared with its earlier projection, according to the statement. Valuation profit from the bank’s stock holdings more than tripled to 770 billion yen as of March 31 from 228.5 billion yen a year earlier, the bank said.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, will probably also boost its dividend as earnings prospects improve. It will raise the annual payout to 14 yen a share from 12 yen previously, the first increase in six years, according to seven of nine analysts surveyed by Bloomberg. Five of them also said it will buy back stock.

Shares of Sumitomo Mitsui have jumped 47 percent this year. The stock slipped 0.2 percent today to close at 4,590 yen before the announcement.

Sumitomo Mitsui is scheduled to announce its final earnings on May 15. The preliminary net income exceeds the 686.8 billion yen the bank posted in the year ended March 2006, which was the highest since the holding company was formed in 2002 following a merger.