The nation's biggest banks are looking to get more bang for their buck Down Under, expanding loans in Australia 25 percent in the past year.
With interest rates near zero at home, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are tapping into a developed economy that offers higher margins on loans than their domestic market and a benchmark cash rate of 2 percent. Their total loans outstanding in Australia grew to 39.9 billion Australian dollars ($28.1 billion) as of Sept. 30.
While Australia's economy is struggling to shift away from a reliance upon mining, there are signs that unprecedented central bank stimulus is having an effect and a subpar growth rate of 2 percent looks robust in comparison to Japan. Sydney and Melbourne housing has been booming for some time, and that's now being complemented by a gradual acceleration in business borrowing with overall private credit growth quickening to 6.7 percent, the fastest pace since 2008.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.