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Japan’s SMFG looks outside traditional banking for growth: CEO

Jun Ohta, CEO of Sumitomo Mitsui Financial Group (SMFG), is steering the company towards international markets and diversifying its business portfolio amidst a rapidly evolving banking landscape, as he shared with Nikkei.

Recognizing the pivotal role of overseas markets in driving growth, Ohta emphasized SMFG’s commitment to expanding its presence beyond Japan’s borders. With plans for continued investment and business expansion abroad, the company is poised to capitalize on global opportunities.

Ohta also highlighted the importance of addressing structural changes in today’s increasingly fragmented world, emphasizing the need for heightened awareness of geopolitical risks. Moreover, he touched upon key factors such as the Bank of Japan’s monetary policy and the ongoing digital transformation of banking services.

As SMFG finalizes its medium-term management plan for fiscal 2023 to 2025, Ohta anticipates a slowdown in the growth of loans, which has been a primary driver of the bank’s recent strong performance. To offset this, he envisions leveraging SMFG’s non-banking businesses, including credit cards, securities, and consumer finance, to sustain overall earnings growth.

SMFG’s strategic partnerships, such as the capital tie-up with Culture Convenience Club and investment in SBI Holdings, are integral to its vision of integrated services. The company’s upcoming “superapp” aims to seamlessly connect various financial products and services, enhancing convenience for customers.

In addition to enhancing digital offerings, SMFG plans to revamp its physical store strategy. Recognizing the evolving role of brick-and-mortar branches, the company intends to focus on specialized services like investment assistance and general consultations, tailoring store locations to customer needs.

Addressing concerns about potential changes in the Bank of Japan’s monetary policy, Ohta remains cautious about the impact on business operations. While SMFG’s next medium-term plan assumes no interest rate hikes, he remains vigilant about potential credit rating downgrades for Japanese government bonds and its implications for the banking sector.

Preparing for potential challenges, Ohta stresses the importance of contingency planning to mitigate risks associated with credit crunch scenarios. By staying adaptable and forward-thinking, SMFG aims to navigate through uncertain times while continuing to deliver value to its stakeholders.


Trish Basangar

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