Shinsei Eyes Southeast Asia to Start Consumer Lending Abroad

Shinsei Bank Ltd., the Japanese lender that gets almost half its revenue from consumer credit, plans to expand the business into Asia within three years, its chief executive officer said.

The bank is studying Southeast Asian countries where household spending will grow, CEO Shigeki Toma, 64, said in an interview, declining to comment on locations. Shinsei aims to boost consumer loans 33 percent by March 2016 as Japan recovers from an industry crackdown, he said.

Shinsei would join Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., Japan’s biggest banks by market value, in tapping consumer credit demand in Asia as loan profitability shrinks at home. Japan’s consumer-finance industry is rebounding from a 2010 law aimed at protecting borrowers by capping interest rates and loan amounts.

“We want to go overseas as soon as possible,” Toma said on July 3. “A consumption boom is expected in the region and that would boost the business significantly.”

Shinsei’s consumer loans outstanding rose to 498 billion yen ($5 billion) in the three months through March after falling in the first three quarters of the fiscal year, company data show. The Tokyo-based bank partly owned by J. Christopher Flowers plans to increase unsecured loans to 660 billion yen by March 2016, according to its midterm business plan.

Domestic Strategy

Shares of Shinsei rose 5.1 percent to 246 yen at 12:57 p.m. in Tokyo, today’s best performer on the 85-stock Topix Banks Index. They have advanced 44 percent this year, compared with a 38 percent increase in the benchmark Topix Index.

The consumer credit business accounted for 46 percent of Shinsei’s 199 billion yen of revenue in the year ended March, the earnings data show.

“Loans have been picking up this year,” said Toma. “We’re trying to encourage those who are already clients of our banking service to use our consumer loan service too.”

Shinsei folded its Lake-brand consumer credit business into the bank in October 2011, lessening the impact of regulations set the preceding year.

Sumitomo Mitsui’s consumer lending unit plans to open as many as four offices in China within three years, more than doubling its presence in the world’s second-biggest economy, SMBC Consumer Finance Co. President Ken Kubo said in March. The unit already operates in Shenyang, Shenzhen and Tianjin.

Lending outstanding in China, Hong Kong and Thailand totaled 22 billion yen as of Dec. 31, about 3 percent of SMBC Consumer Finance’s 744 billion yen of loans.

Shinsei has corporate lending alliances with India’s Yes Bank Ltd. and Vietnam’s Bao Viet Holdings to provide finance for Japanese companies operating in those countries.