Eye on India and America, record increase in profits

Big banks of Japan are earning huge profits these days and have huge reserves of cash. Prominent names in these banks include:

• Mitsubishi UFJ Financial Group (MUFG)
• Sumitomo Mitsui Financial Group (SMFG)
• Mizuho Financial Group

According to a report, these top banks of Japan have also increased their earnings tremendously by selling cross-shareholding. Due to these banks having such a huge amount of cash, they are exploring investment opportunities in India and America.

Earned profits by selling cross-shareholdings

Japanese banks are reducing cross-shareholdings under pressure from the Tokyo Stock Exchange to improve valuations.

• MUFG aims to reduce its cross-holdings by 700 billion yen ($4.7 billion) by March 2027.
• SMFG plans to dispose of 600 billion yen of holdings by March 2029.
• Mizuho Financial Group aims to reduce its cross-shareholdings to 300 billion yen by March 2026.

These funds are now being used to invest in new and emerging markets.

Special attention of banks on India and America

These Japanese banks already have presence in India and America, but now they want to further increase their investment in these countries.

Why are Japanese banks investing in India?

1. Strong economic growth:
   India’s rapidly growing economy and increasing capital expenditure (CapEx) have created excellent investment opportunities.
2. consumer demand:
   The need for credit and financing is increasing due to increasing consumer demand in India.
3. IPO boom:
   Record amount is being raised from IPO in the Indian market, which remains a center of attraction for investors.

MUFG expands into India

Mitsubishi UFJ Financial Group (MUFG) has selected India as one of the main pillars of its Asia growth strategy.

Major Investments:

• MUFG has invested in big Indian companies like Reliance Industries and Adani Group.
• The bank aims to double its credit exposure in India to $30 billion in the next few years.

Big investment in DMI Finance:

MUFG has invested $333 million in DMI Finance Pvt Ltd. The deal valued DMI Finance at around $3 billion. MUFG has indicated that it wants to invest more in India.

Why is the expansion of Japanese banks in India beneficial?

1. Expansion of Financial Services Sector:
   The growing demand for financial services in India and the expansion of digital lending have created opportunities for Japanese banks.
2. Investment in structure and infrastructure:
   There is a huge need for credit to invest in the rapidly growing infrastructure and projects in India.
3. Technology and Startup Ecosystem:
   Japanese banks are also looking at investment opportunities in India’s startup and technology sector.