Sumitomo Mitsui Banking Corp. (SMBC) is making headway in deploying its balance sheet more efficiently, as the Japanese lender seeks to improve returns and take profits to new heights, according to a top executive.
The unit of Japan¡¯s second-largest banking group is moving beyond traditional lending and utilizing tools such as synthetic risk transfers and loan portfolio sales, SMBC Asia-Pacific Deputy Head Carsten Stoehr said. It is distributing loans more quickly and focusing on fees to generate revenue without tying up as much capital.
Parent Sumitomo Mitsui Financial Group unveiled targets in May to boost return on tangible equity (ROTE) to 15% in the next five years from 11.4% last fiscal year. Part of that involves shifting away from providing relatively cheap loans on the back of its hefty balance sheet, particularly in markets outside of Japan. Waning deposit growth is adding to the impetus for the shift.
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