Japan's megabanks hit the brakes on regional expansion

Sumitomo’s loans to Asia stayed flat at $82b as it shifted focus to the US.

Japan’s megabanks have been expanding into Asia at a more controlled pace as the economic downturn spreads across the region, according to a report from Nikkei Asian Review. 

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The balance of overseas loans from Mitsubishi UFJ Financial Group fell 2.7% to $397.08b (JPY43.9t) in December in a sign that the bank may be preparing for a possible decline as the US-China trade tensions persists.

Similarly, the overseas loans of Sumitomo Mitsui Financial Group (SMFG) rose to $242b from $232b although loans to Asia stayed flat at $82b as the bank shifted focus to US.

Mizuho Financial Group has also expressed caution with regards to Asia although it boosted the balance of overseas loans by 19% to $259.3b in December with the region accounting for half of growth.

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Banks in Japan have been actively expanding overseas as they grapple with weak bottomlines in their home turf brought about by a dwindling population and sluggish loan demand.

In 2013, MUFG took over Bank of Ayudhya in Thailand, acquired 20% of the Philippines' Security Bank in 2016 and doubled its stake in Indonesia's Bank Danamon to 40% in 2018. Meanwhile, SMFG owns Bank Tabungan Pensiunan Nasional, and Mizuho has tied up with the Export-Import Bank of Thailand.