MHFG is to soon embark on a verification test of smart phone payments with Toho Bank and the test's results are to be used to create uniform standards for the two-dimensional barcodes that are currently being planned by the three banking groups.
MHFG president, Yasuhiro Sato, said, 'The economic effect of moving to a cashless society is JPY10tn, making it an urgent issue.
Further expansion of the banks' overseas operations, which accounted for an estimated 40% of MUFG's gross operating profit, around 30% of SMFG's and around 30% of MHFG
's, will likely be affected by pressures on profitability and expectations to further boost capital, in line with trends seen at global peers.
MHFG also has requested the Board's approval under section 4(c)(8) and 4(j) of the BHC Act (12 U.S.C.
MHFG also has filed a notice under section 4(c)(8) and (4)(j) of the BHC Act to acquire the U.S.
nonbank subsidiaries and subsequent performance of their activities by MHFG may reasonably be expected to produce benefits to the public that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices.
MHFG has indicated that it expects that the proposal would improve the financial position and future business prospects of its current banking and nonbanking operations.
Any downgrade of the VRs of MHFG and SMTB would not immediately affect their IDRs, since their IDRs would then be underpinned by the SRFs of 'A-'.
For MHFG and its subsidiaries and SMTB, positive rating action to align their ratings with those of the other two Japanese mega banking groups would depend on further enhancement of capitalisation while stronger earnings are sustained (without any meaningful increase in risk appetite), which would be aided by further improvement in the wider domestic real economy, including sound growth in demand for capex and investment.
Our analysis suggests a 150bp rise in yields on foreign bonds would reduce the banks' Fitch Core Capital ratios by 140bp for MHFG
, 100bp for MUFG, and 40bp for SMFG.