Asia banking on expansion

Asia banking on expansion
People walk past a yacht on display at the China (Macao) International Yacht Import and Export Fair in November 2013. The Chinese are the world's biggest buyers of luxury goods, and Asian banks are expanding in the region to capitalise on them.

As a growing and increasingly affluent consumer class emerges across most of Asia, regional banks are focusing on extending their reach.

Banks from almost every country in east and south Asia are planning to expand on their home turf and regionally. The largest banks from Japan, the Chinese mainland, Hong Kong, Singapore, Indonesia and Malaysia are even looking to expand globally.

In Japan, banks' cash vaults fulled up as a result of economic stimulus and a stock market rally last year. Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group all saw their profits spike.

Last November, the governor of the Philippines' central bank, Amando Tetangco Jr, says the country's big players have to prepare to compete regionally as the Qualified ASEAN Banks (which will be given equal status to domestic banks across the bloc) will have the option to operate regionally after 2015. Maybank of Malaysia, Bangkok Bank and United Overseas Bank of Singapore are among the strongest regional players within the Association of Southeast Asian Nations, according to the Asian Development Bank.

Global banks like Citibank, HSBC and Standard Chartered have even greater regional coverage. All of them have sought to expand both within Asia and in China while fomenting links between the two.

Bangkok Bank, the largest bank in Thailand by assets, plans to open a branch in Cambodia and will look at opening branches in other countries, including more in Vietnam.

Things have been a bit more difficult for banks in South Korea, which have struggled to be more profitable in an environment of pervasively low interest rates. Kookmin Bank, the largest in the country, closed 55 branches in January.

South Korea's Financial Supervisory Service says the total net income at private and State-run banks was 4 trillion won (S$4.82 billion) in 2013, about half the net income in 2012.

Standard Chartered's performance in South Korea helped lower profits at the global bank by 16.7 per cent in 2013 from a year earlier to US$3.99 billion (S$5 billion). The bank's income in the country fell 12 per cent while it rose 8 per cent in the Chinese mainland and generally rose 6 per cent across the Asia-Pacific region.

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