Japanese banks’ outstanding loans up 10% in SE Asia, down 9% in China

24, Oct. 2019

BANGKOK, NNA – Japanese bank financing is growing in Southeast Asia as business activity flourishes on the region’s high economic growth, while loans and investments in China are slowing because of the U.S.-China trade dispute.

Japanese banks’ outstanding loans in eight Southeast Asian nations stood at $250 billion as of the end of June this year, up 10 percent from a year earlier. Loans from the same institutions in China fell 9 percent year on year to $77.2 billion, according to the monetary authority Bank of Japan.

“The data may reflect increasing direct investment of Japanese companies in Southeast Asia thanks to lower uncertainties in the region relative to China,” Atsushi Kamio, a researcher with Daiwa Institute of Research Holdings Ltd. in Tokyo, said in phone interview with NNA on Sept. 30.

The trend in Southeast Asia is likely to continue, he added, due to uncertainties about the outcome of the Sino-U.S. trade row, he added. Manufacturing booms and strong consumption patterns are also driving growth in Southeast Asia.

The eight Southeast Asian countries are Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

All eight nations except Malaysia posted growth in loan balances, with Indonesia and the Philippines increasing 33 percent and 39 percent respectively. Lending from local branches of Japanese lenders explained those rises, according to data from International Consolidated Banking Statistics of the Bank for International Settlements, international banking regulator.

The totals cover loans from banks in Japan as well as from their overseas branches and units to local and Japanese firms in each country. They also include equity investments made by the banks.

The monetary authority data show the balance in Thailand was the region’s largest at $97.3 billion, up 7 percent from a year ago and nearly 40 percent of the eight nations altogether.

The loan balance has grown in Myanmar as three Japanese mega banks – MUFG Bank Ltd., Sumitomo Mitsui Banking Corp. and Mizuho Bank Ltd. – have operated branches there since 2015.