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The Yomiuri Shimbun Monitors show the website of Jenius Bank in New York in April.
By Shunichi Okada and Tomohiko Kanai / Yomiuri Shimbun Staff Writers
14:06 JST, June 2, 2024
Three megabank groups — Mitsubishi UFJ Financial Group, Inc., Sumitomo Mitsui Financial Group Inc. (SMBC) and Mizuho Financial Group, Inc. — have been focusing on their financial businesses in the United States. This is because they can expect high margins and large profit growth in the United States, unlike in Japan where interest rates are low.
Although the U.S. economy is in a state of uncertainty, the megabank groups are taking steps to strengthen their U.S. operations.
In summer last year, SMBC launched the digital Jenius Bank in the United States. It is rare for a Japanese bank to offer retail financial services in the country.
Jenius Bank offers savings deposit and loan services online, which allows it to expand its customer base at low cost compared to operating physical branches.
The bank plans to enter into ordinary deposit and credit card businesses as well. A special app will also be introduced by the end of this year.
“We can earn large profits despite having a small market share in the United States,” said Osamu Yagi, head of the CEO Office of SMBC’s Americas Division, which oversees the group’s U.S. business strategies. “We hope to develop the market with services closer to customers’ lives.”
The consolidated net profits of the three megabank groups exceeded ¥3 trillion for the first time in the business year that ended in March, mainly thanks to good performance in their operations in the United States and other countries.
The balance of outstanding loans at the three megabanks in the United States grew for the third consecutive year to ¥36.2 trillion in the same business year, about 1.6 times the ¥23.3 trillion amount in fiscal 2019.
The interest rate profit margins on the three megabanks’ lending to large corporations are about 0.6% in Japan but top 1% overseas.
The three megabanks’ good performances can be attributed to their efforts to redirect funds overseas while improving efficiency by, for example, consolidating branches in Japan, where a negative rate policy had been implemented.
In August last year, MUFG spent about ¥130 billion to raise its stake in U.S. Bancorp, a regional bank based in the Midwest, to 4.39%. MUFG, which primarily serves U.S. customers on the East Coast, aims to develop its customer base through U.S. Bancorp.
In December last year, Mizuho acquired U.S. investment bank Greenhill & Co. for about ¥76 billion. Mizuho aims to earn commissions by providing advice on mergers and acquisitions, among other operations, in the United States.
Mizuho, which has been focusing on investment banking business in recent years, ranked 10th in the world last year in terms of investment banking fees. It was the first time for Mizuho to rank among the top 10.
“We have been achieving various synergistic effects thanks to the acquisition of Greenhill,” Mizuho President Masahiro Kihara said. “The effects will be further strengthened over the next year.”
