TOKYO, Feb 4 (Reuters) - Japan's largest lender

Mitsubishi UFJ Financial Group ( MUFG ) reported on Wednesday a

32% surge in quarterly net profit, powered by sales of

cross-shareholdings and a bump in margins due to higher interest

rates in Japan.

Three rate hikes since March 2024 have widened domestic loan

spreads, while the return of inflation has encouraged large

Japanese corporations, which make up the bulk of MUFG's

corporate clients, to take on loans for growth investments.

Profit in the October-December period came in at 490.74

billion yen ($3.16 billion) versus 370.64 billion yen a year

earlier, according to Reuters' calculations based on nine-month

cumulative figures disclosed in a filing.

MUFG has reached 99.9% of its annual profit guidance of 1.75

trillion yen in the first nine months of the financial year, and

is narrowly trailing the 1.841 trillion yen average annual

estimate of 14 analysts polled by LSEG.

The lender, which owns about 23.5% of Wall Street bank

Morgan Stanley ( MS ), sold an additional 55 billion worth of

its equity holdings over the October-December period, with a

further 37 billion agreed to be sold before the end of March

2027.

($1 = 155.2400 yen)

(Reporting by Anton Bridge; Editing by Muralikumar

Anantharaman)