TOKYO (Reuters) -– Sumitomo Mitsui Financial Group, Japan's third-biggest bank by assets, outshone its larger rivals and posted its biggest profit in seven quarters on Monday, helped by an improvement in its stock portfolio and a decline in bad loans.

While Mitsubishi UFJ Financial Group and Mizuho Financial Group have made a slow recovery from the global financial crisis, Sumitomo appears to be improving at a quicker pace.
The bank's October-December earnings outstripped the combined results of Mitsubishi UFJ and Mizuho in the same period, a rare result from the smallest of Japan's three “megabanks.”
However, analysts cautioned that it was still too early to declare a full-fledged recovery, given that Sumitomo Mitsui's lending business remains sluggish, due to chronic weakness in Japan's economy.
“We absolutely have to see the fourth-quarter results. They are unlikely to fall into the red, but there is a good chance they will not be able to convincingly beat their forecast,” said Tatsuo Majima, a senior analyst at Tokai Tokyo Research Center.