SMFG Targets ¥800bn Trading Revenue as Japan Rates Normalize

Sumitomo Mitsui Financial Group plans to double sales-and-trading revenue to ¥800 billion from about ¥400 billion in roughly six years. Arihiro Nagata, head of SMFG’s global markets division, said the business currently generates about ¥400 billion and set a conservative six-year timeline for the target: “With interest rates normalising there’s a significant increase in cases where we’re being asked to trade.”

Higher government bond yields, currency moves and record equity prices have increased demand for products linked to Japanese government bonds, yen interest-rate swaps, foreign exchange and equities. The 10-year Japanese government bond yield recently reached about 2.8%, and the Nikkei closed at record levels above 68,000.

Investor composition in yen interest-rate swaps has shifted. During the era of near-zero rates domestic investors made up about 70% of SMFG’s swap flow; Nagata noted foreign investors now account for roughly 70%.

To support the expansion, SMFG reorganised trading operations to better integrate its banking and securities units. The group plans to deepen cooperation with Jefferies, in which it holds a 20% stake, to strengthen international distribution and execution.

SMFG says a larger sales-and-trading franchise would add fee and trading revenue as clients seek hedging, liquidity and structured products during periods of higher volatility.