TOKYO -- Japan Post Holdings revealed plans Wednesday to increase its banking unit's investment in such risk assets as foreign bonds and stocks by 30% to 60 trillion yen ($496 billion) in fiscal 2017.
Japan Post Bank currently puts more than 100 trillion yen of its over 200 trillion yen in total assets under management into Japanese government bonds. But returns on JGBs are sure to shrink amid ultralow interest rates given the Bank of Japan's aggressive monetary easing. So the bank will step up investment in riskier assets for higher returns.
The holding company is planning to go public in the fall, along with its units Japan Post Bank and Japan Post Insurance. Preliminary paperwork was submitted Tuesday to the Tokyo Stock Exchange. The group's vision for growth is key to a successful debut on the market.
As of Tuesday, Japan Post Bank had 31.6 trillion yen in foreign bonds and 2 trillion yen in stocks, with risk assets totaling 46 trillion yen. The plan is to raise the balance by 14 trillion yen over the next three years.
The group is projecting net profit of 450 billion yen in fiscal 2017, up 7% from the fiscal 2014 estimate. It plans to generate 330 billion yen of this profit at Japan Post Bank, roughly flat from fiscal 2014, and 80 billion yen at Japan Post Insurance.
Postal service unit Japan Post is facing tough competition in its Yu-Pack parcel delivery business. The goal to turn the business profitable in fiscal 2015 has been pushed back to fiscal 2016. By expanding international operations through the acquisition of Australian logistics giant Toll Holdings, the group aims to rebuild the business quickly.