Japan's megabanks raise annual earnings forecasts, flag data centre slowdown risk
TOKYO: Sumitomo Mitsui Financial Group and Mizuho Financial Group on Friday raised their profit forecasts for the financial year but flagged the prospect of a slowdown in investment into AI data centres.
Tokyo's major Japanese banks, Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group, recently announced higher annual earnings forecasts but expressed concerns over a potential slowdown in AI data centre investment. SMFG increased its annual earnings forecast to 1.9 trillion yen from 1.7 trillion yen, while Mizuho raised its forecast to 1.6 trillion yen.
Both banks attributed their optimistic outlook to strong corporate lending demand and higher domestic interest rates, which have increased lending margins. However, SMFG's CEO, Toru Nakashima, warned that a data centre slowdown could negatively affect the company's results in the coming six months. The CEO has tightened credit standards for data centre financing, focusing only on highly creditworthy hyperscalers.
Mizuho CEO Masahiro Kihara also highlighted potential restrictions on data centre construction in the US, citing the impact of the Democratic Party's sweeping wins in last week's midterm elections. These developments have led to a decline in technology stocks due to fears of overheating in global data centre investment and rising political opposition.
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