As Asia depreciates, Japan megabanks fear for their loans

Japanese banks may be starting to regret their biggest increase in overseas lending in 30 years as Asian economies slump and currencies tumble.

Mitsubishi UFJ Financial Group Inc.'s assets in Asia excluding Japan made up 9.3 percent of the total as of March 31, the most in at least 10 years, according to its annual report filed in July. The nation's biggest lender said depreciation could weaken the finances of borrowers. Overdue loans from the region at Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. increased 54 percent in the year ended March 31.

"We have seen nonperforming loans go up in the past three quarters," said David Threadgold, a Tokyo-based analyst at Keefe, Bruyette & Woods, a boutique investment bank. "It's reasonable to think we could go through another round of that."