SUMITOMO Mitsui Financial Group (SMFG) aims for three successive years of record net profit as Japan’s second-largest lender beefs up its business portfolio abroad including in India and the United States, its new chief executive told Reuters.
The bullish outlook from CEO Toru Nakashima reflects his confidence in SMFG’s strategy tapping growth through overseas acquisitions, while anticipating a boost from an end of Japan’s ultra-easy monetary policy to its domestic lending business.
The bank is “certain to attain” its net profit target of 920 billion yen (S$8.2 billion) this financial year through March, a record for the bank, said Nakashima, who took the helm in December following the death of his predecessor.
“And we strive to achieve higher profit in the next year and the year after,” he said in an interview.
One of the main growth drivers would be Asia, where SMFG expects to triple profit before goodwill amortisation to 90 billion yen in three years, Nakashima said, adding that India and Indonesia are among its most hopeful markets.
SMFG became the first Japanese bank to make a major foray into India in recent times when it bought a majority stake in credit firm Fullerton India in 2021 for US$2 billion from Singapore’s state fund Temasek Holdings.
“While our franchise in Indonesia is close to offering full-line services now, we have just begun building our franchise in India. We’ll probably need to do more acquisitions and invest more in India when opportunities arise,” Nakashima said.
In the United States, SMFG is enhancing its investment banking business through partnership with Jefferies Financial Group and beefing up its fixed income trading business with new hires, he said.
SMFG’s war chest for overseas expansion will be financed by its core banking business at home, which is likely to receive a windfall when the Bank of Japan ends negative interest rates, a step widely expected in coming months.
SMFG, Japan’s second-biggest bank by assets after Mitsubishi UFJ Financial Group, said it expects a policy rate increase to 0 per cent from negative 0.1 per cent would boost its annual net interest income by 30 billion yen. REUTERS
