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Mitsubishi UFJ (MTU) to Post Q1 Earnings: What's in Store?

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Mitsubishi UFJ Financial Group, Inc. is scheduled to report first-quarter fiscal 2018 (ended Jun 30, 2017) results on Aug 7.

The Japanese banking giant reported profits attributable to owners of parent of ¥926.4 billion ($8.1 billion) for the fiscal year ended Mar 31, 2017, down 2.6% year over year. Results reflected decreased gross profits and a fall in net interest income. However, stable general and administrative expenses, and low credit costs acted as tailwinds.

Despite this dismal performance, Mitsubishi UFJ ADR has gained 6.5% on the NYSE for the three-month period ended Jun 30, 2017, outperforming the 3.1% rally of the industry it belongs to.

Will Mitsubishi UFJ disappoint again in the upcoming release? Let's see what factors might have influenced the earnings report this time around.

Factors to Impact Q1 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 rates policy, this will likely keep Mitsubishi UFJ’s net interest income under pressure.

Strengthening of Currency Likely to Affect Results: Appreciation of yen is likely to adversely affect Mitsubishi UFJ’s overseas loan and deposit balances in the to-be-reported quarter.

Expenses Might Rise: Bottom-line growth might be hurt by continued rise in expenses, driven by regulatory costs in overseas businesses.

Investment Banking Fees Likely to be Low: Global investment banking fees were slightly down on a year-over-year basis in second-quarter 2017. Per the Thomson Reuters data, the total deal value of announced M&As across the world fell during the quarter. Thus, the company might have recorded lower fee income.

Reaffirmation of Net Income Target: Notably, in the last quarter, Mitsubishi UFJ reaffirmed its target of ¥950 billion of consolidated net income for the fiscal year ending Mar 31, 2018, indicating an increase of 2.5% year over year.

Currently, Mitsubishi UFJ 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 Stocks

Among other foreign banks, ING Group, N.V. (ING - Free Report) is scheduled to report results on Aug 2. While UBS Group AG (UBS - Free Report) and The Royal Bank of Scotland Group plc (RBS - Free Report) are scheduled to report on Aug 4.

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