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RETAIL BANKING | Staff Reporter, Japan

Sumitomo Mitsui banks on U.S. Treasuries for profits

Running short of viable investment options, Japan’s Sumitomo Mitsui Financial Group will continue investing in U.S. Treasuries to boost profits.

SMFG is Japan’s third largest lender by assets. It assets of US$1.8 trillion make it one of the largest financial institutions in the world.

A ranking bank officer said the company has been making gains from U.S. Treasury trading and noted that yields on Japanese government bonds have remained flat.

Amid worries about Europe's deepening debt crisis, investors have been seeking the perceived safety of U.S. Treasuries, driving up their prices and pushing down yields.

SMFG is bracing for the possibility that Europe's debt crisis could affect the region's healthier economies like Germany's. It said European banks rushing to trim their balance sheets has provided an opportunity for Japanese lenders to push for further expansion overseas by mopping up customers and assets.

At the start of the financial year that began in April, SMFG and rival Japanese banks had expected to suffer sharp falls in bond trading gains after the previous bumper year, but the Eurozone's problems and global economic slowdown mean they have continued to see healthy profits from the sector.

SMFG is not interested in acquiring banks in the United States, citing the introduction of tougher regulation and smoldering mortgage issues in the country.

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