IR Information
Strengths and Challenges
Challenges (1) Improvement of risk-return profile of loan portfolio
SMBC has been managing overseas loans conservatively amid the continuously worsening global economy after the Lehman Brothers’ bankruptcy; however, corporate customers with high credit ratings had a strong appetite for funds in the first half of FY3/2009 and the outstanding amount of overseas loans as of March 31, 2009 increased year over year. Outstanding balance of domestic loans also increased year over year, as we proactively responded to the borrowing needs of large domestic corporations resulting from the malfunction of capital markets, in addition to sufficiently supplying funds to creditworthy SMEs.
SMBC has been constantly reinforcing its credit risk management framework, based on its experience during the intensive resolution period of non-performing loan problems (in December 2002, Japanese government designated the period as until FY3/2005). Especially since the subprime crisis, we have been focusing on business turnaround and preventing credit deterioration by further enhancing our organization by:
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- establishing a department to globally manage credit risk of non-Japanese companies
("Credit Management Dept., International Banking Unit"), - ·
- establishing specialized departments in the Americas and Europe to manage various risks comprehensively, and,
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- establishing a specialized department to support business turnaround.
Going forward, on domestic creditworthy SMEs clients, we will strive to continue supplying funds; while on domestic large-size and overseas loans, we will further strengthen credit screening to secure a more appropriate risk-return profile.
<Reference> Loan balance (SMBC)
