Mizuho Financial Group is raising its dividend payout as profits surge and other big Japanese banks may follow suit, but the benefits to shareholders may be short-lived.
Likely stricter capital rules in coming years may curb the ability of Japan's biggest banks to return more of the bounty to investors.
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Mizuho, the nation's second-biggest bank by assets, said on Friday it will pay out 6.5 yen a share, up from the originally planned 6 yen. The first increase in six years means the bank will return an additional 12 billion yen ($120 million) to shareholders for the business year to March.
Japan's three "megabanks" are benefiting from Prime Minister Shinzo Abe's stimulus policies. A surging stock market has boosted their trading businesses and the value of their equity holdings, while economic recovery is beginning to spur lending demand and corporate capital spending.
Shubiya district, Tokyo, JapanGetty Images
But while the lenders have enough capital under new guidelines set by global regulators, megabank executives worry that rising global pressure for even tighter capital requirements may keep them from raising dividends and buying back shares over the next four years as much as investors now hope.
Mizuho and Sumitomo Mitsui Financial Group saw their October-December net income slip from the year-earlier boom at the start of "Abenomics," in earnings announcements last week. The same is expected for Mitsubishi UFJ Financial Group , Japan's biggest lender by assets, which reports its results on Monday.
But the three remain on track to post their biggest combined net profits in eight years for the 12 months through March.
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Investors think it's payback time, as the megabanks have been relatively stingy with their capital in recent years.
"We have been discussing this issue with a lot of investors almost every single day," MUFG deputy president Masaaki Tanaka told Reuters this week. "We know we have very strong pressure from the investors to give back some money to them."
The bank will decide just before its June annual shareholders' meeting what to do about a "buyback or whatever kind of capital action," Tanaka said.
