Sumitomo Mitsui Trust Holdings Inc. (8309), Japan’s fourth-biggest lender by market value, plans to increase its target for overseas profit to 15 percent of the total after meeting its goal more than a year ahead of schedule.
Sumitomo Mitsui Trust’s income from operations outside Japan reached 10 percent of gross earnings already in the half-year ended Sept. 30, Chairman Hitoshi Tsunekage said in a Dec. 24 interview. The Tokyo-based lender had set that target for the year ending in March 2015.
Japan’s banks are persifying their businesses and expanding abroad as a shrinking population and benchmark interest rates near zero constrain lending profitability at home. Sumitomo Mitsui Trust is interested in lending backed by assets such as ships and aircraft for non-Japanese borrowers, and loans for real estate overseas, Tsunekage said.
“We’ve achieved our target 1 1/2 years ahead of schedule,” said Tsunekage, 59. “We continue striving to increase overseas lending by expanding the range of transactions. We can also expect profit from our custodial and asset-management businesses abroad.”
Sumitomo Mitsui Trust is working on a ship finance project in Hong Kong with Asian banks, Tsunekage said. The bank’s share will be about 10 billion yen ($96 million), he said, without giving details.
Photographer: Akio Kon/Bloomberg
Hitoshi Tsunekage, chairman of Sumitomo Mitsui Trust Holdings Inc..
Profit from overseas accounted for about 6 percent of the total in the year ended March 2012, when Sumitomo Mitsui Trust was created via the merger of Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc., Tsunekage said. The lender this year began a “full-scale” effort to strengthen staffing abroad, he said.
Sumitomo Mitsui forecasts that credit assets outside Japan, including loans and fixed-income investments, will increase to 5.06 trillion yen in March 2014 from 4.06 trillion yen from a year earlier, an earnings presentation from last month shows.
“Our areas of focus include not only Asia, but also Europe and North America,” said Tsunekage. “The key is to persify credit in terms of region, size and type,” which allows the bank to contain risks, he said.
Shares of Sumitomo Mitsui Trust rose 1.5 percent to 549 yen as of 1:28 p.m. in Tokyo. The benchmark Topix index gained 1.8 percent.