Japanese mega banks

Japanese mega banks continue to cut JGB exposure and remaining holdings have an increasingly shorter duration. They have also slashed equity positions: the value of which has held firm due to rising prices.

However, increased holdings of foreign bonds, especially US Treasuries, has made the Balance Sheets and P&L of the mega banks that more sensitive to global monetary tightening.

There is some risk (and reward) associated with the growing foreign loan portfolio.

SMFG is less sensitive to a rise in foreign bond yields.

Dollar Borrowing has risen sharply. Funding mismatch: US assets (>US$3.5 trillion) exceed US Liabilities by some US$1 trillion.