TOKYO: Japan's top regional bank Resona Holdings will deploy 10 trillion yen (US$92 billion) for sustainable finance by 2030, its president said, as it seeks alternative revenue sources in a country facing low interest rates and a population decline.
Resona will mainly extend loans to small and medium-sized firms which tackle environmental, social and governance (ESG) issues, according to the bank which has relationships with about 500,000 smaller corporate clients nationwide.
As ESG issues become more mainstream, business rules and clients' behaviour will have to adapt accordingly, Resona President Masahiro Minami told Reuters.
"There must be a chance for us when such changes come," Minami said in an interview last week which was embargoed for publication on Wednesday.
Unlike bigger banks that largely rely on profits from overseas business, Resona follows "domestic standards" which bans the bank from having branches outside the country. It is thus focused on domestic markets for growth.
But Minami acknowledged the overseas markets, particularly growing Asian markets, look "extremely attractive" in terms of demographics and economic growth.
Japan's biggest lender Mitsubishi UFJ Financial Group Inc has made investments in several Southeast Asian banks over the years, while the No.2 bank Sumitomo Mitsui Financial Group Inc recently said it would invest in Vietnam's biggest non-bank lender FE Credit.
"We are leading a different life from megabanks, and it would also be difficult for us (to win) if we take the same strategy as megabanks," Minami said.
(US$1 = 109.0600 yen)
(Reporting by Takashi Umekawa and Yuki Nitta; Editing by Ana Nicolaci)