Japanese banks are coming back. Between the early 1990s, when they were still regarded as world beaters, and 2003, the year that marked the crux of domestic non-performing loan crisis, overseas loan exposure by the top eight Japanese banks (since merged into three so-called ‘mega banks’) shrank by about 80%. In the past three years, estimates Brett Hemsley, head of research in Tokyo for HSBC Securities (Japan), overseas lending by the three mega banks has doubled. And that could be just a beginning.
All three mega banks, Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank (the wholesale arm of the Mizuho Financial Group) and Sumitomo Mitsui Banking Corporation (SMBC), have set targets that identify global markets as one of the most exciting prospects in an otherwise uninspiring world. Sumitomo Mitsui, smallest of the three megas, aims to raise gross profits from its international business by 32% over the next three years, by focusing on special fields such as project loans and ship finance in Europe and the US, and conventional corporate lending in Asia. Meeting the target would raise profits from global business to about 15% of SMBC’s total revenue, up from 11% to 12% today.
