Is this a sign of economy slow down in Japan?

Sumitomo Mitsui Financial Group, Japan's second-largest bank by market value, will use alliances with Asian banks, including Malaysia's RHB Capital, to boost income as domestic lending falls.

“We have a close relationship with RHB and are considering what kind of business we can do together,'' said President Teisuke Kitayama, 61.

Kitayama said Sumitomo Mitsui may “make a major or small investment'' in commercial banks in Southeast Asia, following its purchase of a stake in a Vietnamese bank last year.

Kitayama said he expects the biggest opportunities to be in consumer banking in Asian nations as he seeks to raise overseas revenue to 15 percent of the total from about 10 percent now. Profit growth is slowing at home as Japanese companies shun credit, helping send Sumitomo Mitsui down 35 percent in Tokyo trading in the past year.

The bank already refers Japanese clients seeking local- currency financing in Malaysia to RHB. It helped finance a $100 million loan for RHB together with the Japan Bank for International Cooperation in 2006.

Malaysia's Employees Provident Fund, which owns 82 percent of RHB, plans to reduce that holding to 35 percent by July, the fund said last month when it announced exclusive talks with Abu Dhabi Commercial Bank PJSC to sell a quarter of the Malaysian bank.

Will the alliance prove worthy?