By Yuma Ikeshita / Yomiuri Shimbun Staff Writer
Toru Nakashima, president and group CEO of Sumitomo Mitsui Financial Group Inc. $(SMFG)$, said that "achieving a net profit of 2 trillion yen is now possible" for the three-year period from the fiscal year ending March 2027 to the fiscal year ending March 2029, in an interview with The Yomiuri Shimbun.
The three-year period coincides with the company's next medium-term management plan.
As part of its core corporate banking business, the group will accelerate building a system that will allow corporate customers to utilize various services, including banking, security and trust services, in an integrated manner.
The following is excerpted from the interview.
The Yomiuri Shimbun: What is the future strategy for corporate banking?
Toru Nakashima: To make proposals that truly resonate with clients' merger and acquisition (M&A) and carve-out strategies, we must leverage the group's comprehensive strength, encompassing not just banking and securities but also trust and leasing businesses.
We need to have bankers that are knowledgeable about each sector in both the banking and securities (divisions). Since April, we have significantly increased the number of divisions with employees holding multiple positions.
Large corporate transactions are a particularly strategic area. We have invested personnel and capital in transaction banking, which is important to that end, and have greatly strengthened it over the past few years. The results are beginning to show, and large corporate transactions have grown significantly.
A joint venture with U.S. securities firm Jeffries Financial Group Inc. will begin in 2027. The joint venture will conduct business in Japanese equities. Japanese securities firms are weak when it comes to getting overseas investors to buy Japanese stocks.
Jeffries, (in which SMFG made an additional investment in October), has a network with global funds that can only be accessed by bulge bracket banks, (which are top-tier global investment banks). By connecting domestic issuers and our own group with overseas investors and Jeffries, we expect to build a Japanese stock business that can compete with bulge bracket banks.
Yomiuri: What will be the theme of the next medium-term management plan currently being formulated?
Nakashima: We expect the growth trend of the Japanese economy to continue during the next medium-term management plan period.
Both our wholesale and retail businesses are growing significantly, and our primary focus is to continue that growth. At the same time, we have invested around 1.5 trillion yen in Asia over the past few years, but we have not yet seen sufficient results.
However, this region, which includes India, has potential for high growth, so it will become a very significant business in the future.
We also expect growth in global capital markets. To compete in the overwhelmingly large U.S. market, we will partner with Jeffries for cross-border M&A and equities, and will primarily have SMBC Nikko Securities Inc. handle debt and fixed income. The capital market in Japan should also grow.
Yomiuri: What are the numerical targets, such as net income, for the next medium-term management plan?
Nakashima: In May, we set targets of 2 trillion yen in net profit and 11% ROE (return on equity) for 2030. But the environment has improved this fiscal year, so we revised the net profit target upward by 200 billion yen.
We haven't decided on the final targets for the next medium-term management plan at this point, but I feel we can reach 2 trillion yen before 2030. If interest rates and the U.S. economy are favorable, it's possible we can achieve this during the next medium-term management plan period.
ROE also reached 10% this fiscal year, and we can achieve an even higher level. To compete with major European and U.S. banks, a minimum of 15% is necessary; JPMorgan Chase & Co. has 20%. While there is a difference in interest rates between Japan and the United States, we aim for around 15% in the future.
Yomiuri: SMFG's stock price hit a 19-year high this term.
Nakashima: Environmental factors helped, but it has more than doubled since I became president two years ago, which is very gratifying. Our past efforts are paying off.
However, our price book-value ratio $(PBR)$ has just exceeded 1.2, still below the 1.5 to 2 range of major European and U.S. banks. We want to reach that range even when performance is poor. We aim to keep pushing the stock price higher.
Yomiuri: How will you advance the group's digital strategy?
Nakashima: Especially as Olive (SMFG's personal financial accounts) business grows, we've seen increased opportunities to be recognized as "a banking group that can win in a world where digitalization is advancing." We've entered an era in which IT development capabilities directly determine a financial group's competitiveness, and we intend to strengthen this area decisively.
Including the renewal of core banking systems, we'll need about 1 trillion yen in funding (for IT investment). Beyond AI-driven productivity gains, systems now demand not only traditional robustness and security but also cloud-based solutions enabling rapid updates and external integrations. Without such structural reforms, overall development capabilities won't improve.
This will enhance our product development capabilities, enabling faster product releases. Products and services will improve, increasing turnover rates. Customer satisfaction will rise, translating into financial returns. It's a long journey, but it must be done.
Yomiuri: What is the current progress with Olive and (the comprehensive corporate financial service) Trunk?
Nakashima: While a fair number of financial services are now available on Olive, there's still room for more. For non-financial services, users can now book an overseas trip. By the end of December, we surpassed 7 million accounts, and we're receiving many partnership inquiries from other companies.
Trunk reached 25,000 accounts within six months of launch, which is extremely promising. Starting in 2026, we'll introduce a post-payment service for corporate cards as well as a flexible financing service, marking the full-scale launch. Our goal is 300,000 accounts within three years.
With Trunk, we envision enabling the digitalization of domestic wholesale. Olive is advancing retail digitalization, transforming business models that relied on labor-intensive approaches. We aim to make each service a platform for digitalizing operations in each division.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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January 05, 2026 23:17 ET (04:17 GMT)
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