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14 Apr, 2021 Author Yuzo Yamaguchi
As returns-hungry Japanese banks may lend or invest even more abroad after a record year of 2020, the lenders face rising risk of defaults and market volatility in their growing overseas operations, analysts warn.
Japanese financial institutions have a long history of generating interest income and asset growth from operations outside their home market, which has been battered by a prolonged period of low interest rates and weak credit demand. The risks of global exposures came under the spotlight again in early April, when Nomura Holdings Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. flagged potential losses of around US$2.4 billion combined that were reportedly related to the downfall of U.S. hedge fund Archegos Capital.
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15 Feb, 2021 Author Yuzo YamaguchiRehan Ahmad
Mitsubishi UFJ Financial Group Inc. will likely continue to face higher credit risk than two other Japanese megabanks in the near term as the lender s larger international operations leave it more exposed to loan defaults in economies hit hard by the coronavirus pandemic.
MUFG, which extends more loans overseas than Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., has reported the highest nonperforming loan ratios and loan loss provisions among the trio for at least five consecutive quarters, according to data from S&P Global Market Intelligence.
In the fiscal third quarter ended Dec. 31, 2020, MUFG s NPL rose to 1.17%, the highest in three years. The amount of nonperforming loans rose to ¥575 billion, the highest quarter on record, or about 46% of the bank s total nonperforming loans in that quarter. Sumitomo and Mizuho reported NPL ratios of