Sumitomo Mitsui Financial Group (SMFG) plans to double revenue from its sales and trading unit to 800 billion yen ($5 billion) within the next few years, as Japan’s shift away from ultra-low interest rates boosts demand for market products. Arihiro Nagata, head of global markets, said the current 400 billion yen revenue could reach the target in about six years under a conservative timeline.
The ambitious goal coincides with a historic monetary policy shift. The Bank of Japan (BOJ) is widely expected to raise its short-term policy rate by 25 basis points to 1% at its June 16 meeting—the highest level since 1995. Three sources told Bloomberg that a hike is likely barring a sharp escalation in the Middle East conflict. Markets are already pricing an 80% probability of a hike. BOJ Governor Kazuo Ueda signaled the move in a speech on Wednesday, pivoting toward fighting inflation. Two board members have also warned of growing price pressures, and wholesale prices rose 4.9% in April, the fastest pace in three years.
Japan’s market normalization is reshaping trading dynamics. The 10-year JGB yield recently hit a 30-year high of 2.8%, while the Nikkei closed above 68,000 for the first time. Nagata noted that foreign investors now account for about 70% of SMFG’s yen interest rate swap flow, reversing the domestic dominance during the zero-rate era. SMFG has reorganized its trading operations and sees volatility as a catalyst for sales and trading, rather than traditional lending.
The BOJ meeting will also review its bond-buying taper, with a likely pause or slowdown from fiscal 2027 to avoid market disruption. The central bank has raised rates several times since exiting its decade-long stimulus in 2024, each hike reflecting progress toward sustainable 2% inflation.
