Japan's three largest banks are expected to achieve record high profits this year, but there are concerns about the risks posed by tariffs.

Several of Japan's largest banks are expected to achieve record profits this year and have announced plans to buy back stocks, despite warnings that trade tensions could harm business and economic growth. Japan's largest bank Mitsubishi UFJ Financial Group (MUFG) said on Thursday that its net profit is expected to increase by 7.5% to 2 trillion yen ($13.7 billion) for the 12 months ending in March next year. Mizuho Financial Group expects a 6.1% increase in profits to 940 billion yen, while Sumitomo Mitsui Financial Group expects a 10% increase in profits to 1.3 trillion yen. MUFG announced plans to buy back up to 1.5% of its shares at a price of 250 billion yen. Mizuho and Sumitomo Mitsui also announced 100 billion yen stock buyback plans, joining Japanese companies in increasing shareholder returns. MUFG stated in a report that the "high degree of uncertainty" makes predicting the impact of trade policy on the economy, business environment, and performance challenging. The report listed a range of risks from stagflation to the loss of confidence in the US dollar. The net profit guidance for all banks is below analysts' average expectations, but this is not uncommon for Japanese banks, even in times of economic stability, as they often set cautious annual targets. Mizuho CEO Masahiro Kihara stated that the Trump administration's tariff measures have made business planning more unpredictable, and the uncertainty in global trade has led the bank to forecast more conservative prospects. Just a day earlier, Sumitomo Mitsui Financial Group warned that customers were becoming more cautious in trading and investment, setting aside 90 billion yen to address the risks of an economic downturn. These Japanese banks achieved record profits in the past year, benefiting from the long-awaited prospect of a rate hike by the Bank of Japan and the profits from selling shares in client companies they held. However, the risk of a downturn in an economy reliant on trade has cast a shadow over the prospect of further rate hikes and put pressure on stock prices.