TOKYO, Jan 30 (Reuters) - Japan's second-largest bank, Sumitomo Mitsui Financial Group Inc, reported on Monday a jump of 42.6% in third-quarter net profit, as a continuing recovery in economic activities from the coronavirus pandemic boosted the core lending business.

As the government steadily normalises social and economic activity, the lender saw brisk loan demand from companies and had a subdued level of loan-loss provisions.

A weak yen, driven by a widening gap between U.S. and Japanese interest rates, also inflated profits earned abroad.

SMFG posted a profit of 240.6 billion yen ($1.3 billion) in the October-December period versus 168.7 billion. That takes the nine-month total to a record 766 billion yen, almost equivalent to its full-year profit forecast of 770 billion.

But SMFG refrained from lifting its annual outlook, citing recession fears in the United States and Europe, as well as uncertainties over the war in Ukraine.

The forecast is short of the 794.8 billion yen average of 12 analyst estimates compiled by Refinitiv.

Shares of SMFG have jumped about 20% since the Bank of Japan's surprise tweak to its bond yield control in late December, a decision that sparked expectations that the central bank could change its interest rate policy soon.

An exit from ultra-easy policy would widen the spread between deposit and lending rates, a boost for Japanese banks' core earnings after years of being squeezed by rock-bottom rates.

SMFG forecasts a positive impact of 30 billion yen on net interest income if the policy rate is lifted to zero from the current negative 0.1%. ($1=129.4600 yen) (Reporting by Makiko Yamazaki; Editing by Gerry Doyle and Clarence Fernandez)