Japan's best bank for SMEs 2017: Resona Bank
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Japan's best bank for SMEs 2017: Resona Bank

Resona Bank

Japan is a country where small and medium-sized enterprises (SMEs) can too often be overlooked. The gargantuan balance sheets of the country’s three biggest banks, which hold more than $6 trillion of assets between them, ensure only the biggest corporate clients can make a dent on revenues.

The tepid growth of the Japanese economy has ensured that any talk of growing the client base tends to focus on opportunities overseas.

It is a shame that few banks have made SMEs a core part of their business. Resona Bank is a notable exception.

The bank, formed through the merger of Daiwa Bank, Kinki Osaka Bank and Nara Bank in 2001, unveiled a three-year plan in its latest annual report that pinpointed serving SMEs as a core part of its growth strategy.

It lent ¥9.9 trillion ($87 billion) to SMEs in the financial year ending March 31, 2017. By 2020, it wants to increase that to ¥11 trillion, a roughly 10% increase.

It has also announced a plan to increase the time it spends talking to its clients by 50%, as well as rolling out digital solutions – including some automation of sales – that will make it easier for the bank to service a broad network.

Resona has around 400,000 corporate customers, according to its annual report, but only around 20% of those have taken out loans. Resona thinks it can increase that number a lot.

It is also making plans for the next generation of SME business owners. The age of current SME business heads has given the bank an opportunity. It thinks its succession planning-related income from these clients will grow to ¥14 billion over the next three years, from ¥10 billion in March.

It remains to be seen if Resona will be able to achieve a series of growth targets that, in the context of Japan’s tepid economy, look particularly ambitious. But by aligning its fate so closely with SMEs, the bank will make the most of a sector that does not always get the attention it deserves. It may just help create the next corporate giant along the way.

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